Deck 1: Understanding and Working With the Federal Tax Law

Question 1

An international treaty takes precedence over a provision in the Internal Revenue Code.

Answer 1

False

Question 2

Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.

Answer 2

True

Question 3

The adoption tax credit can be explained by social considerations.

Answer 3

True

Question 4

Allowing a taxpayer to choose either a credit or a deduction for foreign taxes paid can be explained by equity considerations.

Question 5

The corporate tax rate of 34 percent applies only to taxable income in excess of $100,000.

Question 6

Subchapter P refers to the subchapter in the Internal Revenue Code that deals with partners and partnerships.

Question 7

Revenue-neutral tax laws reduce deficits.

Question 8

These sections are not in the Internal Revenue Code: §§ 212(1)and 1221(1).

Question 9

The deduction for charitable contributions can be explained by social considerations.

Question 10

Section 6 involves gross income and Section 7 outlines itemized deductions.

Question 11

The Hope scholarship credit can be explained by economic considerations.

Question 12

Longer class lives for depreciable property and the required use of straight-line method of depreciation should dampen the tax incentive for purchasing capital assets.

Question 13

Saving leads to capital formation and thus makes funds available to finance home construction and industrial expansion.

Question 14

The U.S.Federal government has a provision in the Constitution which precludes deficit spending.

Question 15

Regulations are issued by the Internal Revenue Service.

Question 16

Income from patents can qualify for capital gain treatment.

Question 17

The earned income tax credit is not refundable.

Question 18

The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the Internal Revenue Code.

Question 19

Taxpayers may look at Committee Reports to determine the intent of Congress.

Question 20

The citation § 280B is not a proper reference to a section in the Internal Revenue Code.

Question 21

A cite such as 372 U.S.39 indicates a memorandum decision of the U.S.Tax Court.

Question 22

Letter rulings are available for public inspection.

Question 23

Which provision is not justified by social considerations?

A)Refundable earned income credit.
B)Adoption tax credit.
C)Like-kind exchange treatment.
D)Disallowance of illegal kickbacks.
E)None of the above.

Question 24

Revenue Procedures are published weekly by the U.S.Government in the Internal Revenue Bulletin.

Question 25

Taxation is included in the Regulation section of the CPA examination.

Question 26

Stare decisis applies to Small Cases Division decisions.

Question 27

The annual gift tax exclusion in 2010 is $12,000.

Question 28

Proposed Regulations issued simultaneously with Temporary Regulations carry more weight than traditional Proposed Regulations.

Question 29

A district court must abide by the precedents set by the court of appeals of jurisdiction.

Question 30

In general,the "Blue Book" is a primary source of tax law.

Question 31

Which provision could best be justified as encouraging small business?

A)S corporation election.
B)Percentage depletion.
C)Domestic production activities deduction.
D)Interest deduction on home mortgage.
E)None of the above.

Question 32

The U.S.Tax Court has 16 regular judges,and the Court of Federal Claims has 19 judges.

Question 33

The U.S.Tax Court follows a policy of always deciding cases based upon what it thinks the results should be.

Question 34

Which provision could best be justified as a means of controlling the economy?

A)Write-off of research and development expenditures.
B)Accelerated depreciation method for depreciable capital expenditures.
C)Amortization of pollution control facilities.
D)The rehabilitation tax credit.
E)None of the above.

Question 35

Determination letters usually involve completed,as opposed to proposed,transactions.

Question 36

Generally,neither a tax law nor a tax treaty takes general precedence over the other.

Question 37

The Supreme Court must hear all cases appealed from the U.S.Court of Appeals for the Federal Circuit.

Question 38

A taxpayer may select the District Court that will hear his or her tax dispute.

Question 39

A taxpayer who lives in Louisiana and loses in the U.S.Tax Court can appeal to the Fifth Court of Appeals.

Question 40

There are three Courts of Federal Claims.

Question 41

What company or group publishes Supreme Court cases?

A)U.S.Government Printing Office.
B)Commerce Clearing House.
C)Research Institute of America.
D)Lawyer's Co-operative Publishing Company.
E)All of the above.

Question 42

Which of the following types of Regulations has the highest tax validity?

A)Procedural.
B)Proposed.
C)Interpretive.
D)Legislative.
E)None of the above.

Question 43

Which of the following is an administrative source of tax law?

A)Rev.Proc.2009-3.
B)Joint Conference Committee Report.
C)Section 12(d)of the Internal Revenue Code.
D)All of the above.
E)None of the above.

Question 44

Regulations may first be found in:

A)Federal Register.
B)Cumulative Bulletin.
C)Internal Revenue Bulletin.
D)I.R.S.Digest.
E)All of the above.

Question 45

Revenue Rulings are published semiannually in the:

A)Cumulative Bulletin.
B)Federal Revenue Bulletin.
C)Internal Revenue Bulletin.
D)I.R.S.Digest.
E)None of the above.

Question 46

Which type of question is on the CPA examination?

A)Essay.
B)True-false.
C)Fill-in-the blank.
D)Simulation.
E)None of the above.

Question 47

How does a treaty with a foreign country impact a section in the Internal Revenue Code?

Question 48

What impact has the community property system had on our Federal tax laws?

Question 49

Which of the following statements relating to nonacquiescence is not true?

A)A nonacquiescence is published in the Cumulative Bulletin.
B)This procedure may be followed for other than regular U.S.Tax Court decisions.
C)The IRS can retroactively revoke an acquiescence.
D)The IRS must acquiesce or nonacquiesce in every tax case.
E)All of the above statements are true.

Question 50

Which of the following courts has the lowest tax validity?

A)U.S.Court of Appeals for the Federal Circuit.
B)U.S.Court of Appeals for the Second Circuit.
C)U.S.Tax Court.
D)U.S.Supreme Court.
E)All have the same validity.

Question 51

Determine the incorrect citation:

A)Ltr.Rul.20012305.
B)George W.Guill,112 T.C.__,No.22 (1999).
C)Ltr.Rul.200108052.
D)Rev.Rul,98-32,I.R.B.No.25,4.
E)None of the above.

Question 52

Which tax service is owned by Thomson?

A)Tax Center.
B)Standard Federal Tax Reporter.
C)Tax Research Network.
D)Tax Management Portfolios.
E)None of the above.

Question 53

Federal tax legislation generally originates in what body?

A)Internal Revenue Service.
B)Senate Finance Committee.
C)House Ways and Means Committee.
D)House Taxation Committee.
E)None of the above.

Question 54

Regarding technical advice memoranda,which statement is incorrect?

A)Issued by the National Office of IRS.
B)Most often deal with a completed transaction.
C)May be cited and used as precedent.
D)Issued with multi-digit file numbers.
E)None are incorrect.

Question 55

Which item may override an Internal Revenue Code section?

A)Revenue Ruling.
B)Revenue Procedure.
C)Tax treaty.
D)Tax Court Memorandum decision.
E)None of the above.

Question 56

A technical advice memorandum is issued by:

A)Treasury Department.
B)National Office of the IRS.
C)Office of Chief Council.
D)Area Director.
E)None of the above.

Question 57

Douglas and Sue,related parties,are landlord and tenant as to certain business property.If the IRS questions the amount of rent Sue is paying to Douglas,this is an illustration of the:

A)Arm's length concept.
B)Continuity of interest concept.
C)Tax benefit rule.
D)Substance over form concept.
E)None of the above.

Question 58

Which of the following sources has the lowest tax validity?

A)Treasury Regulation.
B)Revenue Ruling.
C)Internal Revenue Code.
D)Proposed Regulation.
E)All of the above have same weight.

Question 59

Which state is a separate property state?

A)Arizona.
B)Louisiana.
C)New Mexico.
D)North Carolina.
E)None of the above.

Question 60

Which citation is considered to be a legislative citation?

A)Ltr.Rul.199952058.
B)Ann.94-5,1994-2 I.R.B.39.
C)Reg.§ 1.1014-1(c)(1).
D)§ 336.
E)None of the above.

Question 61

What are the key components of tax planning?

Question 62

What is the Golsen rule?

Question 63

Explain simulations on the CPA examination.