Question 1

_____ 1.The 16^th Amendment to the US Constitution that provided for an income tax was ratified in 1913.

Accepted Answer

The 16th Amendment to the US Constitution was ratified in 1913 and provided for an income tax.

Question 2

Which of these persons never pays taxes directly?
A)Individual
B)Partnership
C)C corporation
D)Fiduciary

Accepted Answer

Partnerships themselves do not pay income taxes directly. Instead, the profits and losses are passed through to the individual partners, who then report this income on their personal tax returns.

Question 3

Which of these entities is taxed directly on its income?
A)Limited Liability Company
B)C Corporation
C)Partnership
D)Sole Proprietorship

Accepted Answer

C Corporations are taxed directly on their income.

Question 4

_____ 2.The first codification of the Internal Revenue Code took place in 1954.

Accepted Answer

The answer of _____ 2.The first codification of the Internal...

Question 5

_____ 6.A married person filing a separate return has the lowest standard deduction amount.

Accepted Answer

The answer of _____ 6.A married person filing a separate...

Question 6

Which of the following nominal rates does not apply to a C corporation?
A)10%
B)15%
C)25%
D)35%

Accepted Answer

The 10% nominal rate does not apply to a C corporation. C corporations are typically taxed at rates starting from 21% as per the Tax Cuts and Jobs Act of 2017.

Question 7

_____ 7.The lowest tax rate on the tax rate schedules for taxable incomes is the same for individuals and C corporations.

Accepted Answer

The lowest tax rate for individuals and C corporations is not the same; individuals have a progressive tax rate starting at 10%, while C corporations have a flat tax rate of 21%.

Question 8

_____ 15.A flat tax generally would be considered a regressive tax.

Accepted Answer

A flat tax is considered proportional because it taxes everyone at the same rate, regardless of income level. However, it can have regressive effects because lower-income individuals spend a larger portion of their income on necessities.

Question 9

_____ 13.The person giving the gift pays the gift tax.

Accepted Answer

The person who gives the gift is responsible for paying the gift tax, as per U.S. tax laws.

Question 10

_____ 11.Partnerships and S corporations are flow-through entities.

Accepted Answer

Partnerships and S corporations are considered flow-through entities for tax purposes, which means that the income, deductions, and credits of the business flow through to the owners' personal tax returns. The business itself does not pay income taxes.

Question 11

_____ 4.All interest paid to a taxpayer must be included in gross income.

Accepted Answer

Not all interest is taxable. For example, interest on municipal bonds is generally exempt from federal income tax.

Question 12

Which of the following types of taxes is not levied by the federal government?
A)Excise tax
B)Income tax
C)Value added tax
D)Gift tax

Accepted Answer

The answer of Which of the following types of taxes...

Question 13

_____ 3.There are three basic taxable entities: the individual,the fiduciary,and the C corporation.

Accepted Answer

The three basic taxable entities are the individual, the fiduciary (such as a trust or estate), and the business entity known as a C corporation.

Question 14

_____ 10.All limited liability companies (LLCs)can file their tax returns as partnerships,or electively,as corporations.

Accepted Answer

The answer of _____ 10.All limited liability companies (LLCs)can file...

Question 15

_____ 12.Both sales and use taxes are collected in the state in which the sale takes place.

Accepted Answer

Sales tax is collected in the state where the sale occurs, while use tax is collected in the state where the purchased goods are used if sales tax was not collected at the point of sale.

Question 16

_____ 9.Only corporations are allowed to carry their operating losses both backwards and forwards.

Accepted Answer

Both corporations and individuals are allowed to carry their operating losses backwards and forwards under certain circumstances.

Question 17

_____ 16.Adam Smith's four canons of taxation are Equity,Certainty,Economy and Convenience.

Accepted Answer

This statement is true. Adam Smith's four canons of taxation are Equity, Certainty, Economy, and Convenience.

Question 18

_____ 5.A taxpayer's filing status determines the basic standard deduction allowed.

Accepted Answer

The filing status of a taxpayer has a direct impact on the basic standard deduction that is allowed to be claimed when filing taxes.

Question 19

_____ 14.The value added tax is a type of consumption tax.

Accepted Answer

The value added tax (VAT) is indeed a type of consumption tax that is levied on the value added to goods and services at each stage of production and distribution.

Question 20

_____ 8.The alternative minimum tax is a tax determined on a broadened definition of income with no deductions permitted.

Accepted Answer

The alternative minimum tax (AMT) allows for some deductions and exemptions, but it limits or disallows others compared to the regular tax system.

Quiz 1: Introduction to Taxation

_____ 1.The 16th Amendment to the US Constitution that provided for an income tax was ratified in 1913.

Which of these persons never pays taxes directly?

Which of these entities is taxed directly on its income?