Question 1

Using the following choices, show the justification for each provision of the tax law listed.
-A small business corporation can elect to avoid the corporate income tax.

Accepted Answer

The provision allowing small business corporations to avoid corporate income tax is based on economic considerations. This is because small businesses often operate on thin profit margins and imposing corporate income tax on them might force them to close. Therefore, to encourage the growth of small businesses, the tax law allows them to avoid corporate income tax.

Question 2

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Import taxes (customs duties)

Accepted Answer

The answer of Match the statements that relate to each...

Question 3

Using the following choices, show the justification for each provision of the tax law listed.
-A tax credit for amounts spent to furnish care for children while the parent is at work.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 4

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for certain expenses (interest and taxes) incident to home ownership.

Accepted Answer

The deduction for certain expenses incident to home ownership is based on both economic and social considerations. The government aims to incentivize home ownership as it is a significant contributor to the economy, and it also supports the idea of families owning their homes as a fundamental social value.

Question 5

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Office audit

Accepted Answer

The answer of Match the statements that relate to each...

Question 6

Using the following choices, show the justification for each provision of the tax law listed.
-Contributions to charitable organizations are deductible.

Accepted Answer

Contributions to charitable organizations are deductible primarily for social considerations. This provision encourages individuals and corporations to donate to charitable organizations by offering a tax incentive, thereby supporting social welfare and community services.

Question 7

Using the following choices, show the justification for each provision of the tax law listed.
-More rapid expensing for tax purposes of the costs of installing pollution control devices.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 8

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Income tax amnesty

Accepted Answer

The answer of Match the statements that relate to each...

Question 9

Using the following choices, show the justification for each provision of the tax law listed.
-A bribe to the local sheriff, although business related, is not deductible.

Accepted Answer

Bribes, even if they are for business purposes, are not deductible because they are considered unethical or illegal activities. This decision is based on social considerations, aiming to discourage such behavior by not allowing tax benefits for these actions.

Question 10

Using the following choices, show the justification for each provision of the tax law listed.
-Tax credits available for the purchase of a vehicle that uses alternative (nonfossil) fuels.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 11

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for qualified tuition paid to obtain higher education.

Accepted Answer

The deduction for qualified tuition paid to obtain higher education is justified by both economic and social considerations. Economically, it encourages investment in human capital, which can lead to a more skilled workforce and higher productivity. Socially, it promotes higher education accessibility and can help reduce the financial barriers to obtaining a degree.

Question 12

Using the following choices, show the justification for each provision of the tax law listed.
-Tax brackets are increased for inflation.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 13

Using the following choices, show the justification for each provision of the tax law listed.
-A Federal deduction for state and local income taxes paid.

Accepted Answer

Equity considerations are often cited as the justification for allowing a federal deduction for state and local income taxes paid. This is because it aims to ensure that individuals are not taxed on the money they have used to pay another tax, thus promoting fairness in the tax system by preventing double taxation.

Question 14

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Export taxes

Accepted Answer

The answer of Match the statements that relate to each...

Question 15

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for interest on student loans.

Accepted Answer

The provision for a deduction for interest on student loans is justified by both economic and social considerations. Economically, it incentivizes individuals to pursue higher education, which in turn can lead to higher incomes and greater economic prosperity. Socially, it helps to ensure that individuals have access to education regardless of their financial situation, promoting equality of opportunity.

Question 16

Using the following choices, show the justification for each provision of the tax law listed.
-A Federal deduction for state and local sales taxes paid.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 17

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for contributions by an employee to certain retirement plans.

Accepted Answer

The deduction for contributions to certain retirement plans is justified by both economic considerations (as it incentivizes individuals to save for their own retirement and reduces the burden on social safety net programs) and social considerations (as it promotes overall financial well-being and security for individuals). It also has equity considerations, as it ensures that individuals who are able to contribute to retirement plans do not face excessively high taxes on that income.

Question 18

Using the following choices, show the justification for each provision of the tax law listed.
-Tax credits for home improvements that conserve energy.

Accepted Answer

The answer of Using the following choices, show the justification...

Question 19

Using the following choices, show the justification for each provision of the tax law listed.
-Additional depreciation deduction allowed for the year the asset is acquired.

Accepted Answer

The additional depreciation deduction allowed for the year the asset is acquired is designed to provide an economic incentive for businesses to invest in new assets. By allowing businesses to deduct a greater amount of depreciation in the year the asset is acquired, they will have a lower tax liability, which can make the investment more financially appealing. This provision is primarily driven by economic considerations.

Question 20

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-"Pay as you go" (paygo)

Accepted Answer

The answer of Match the statements that relate to each...

Quiz 1: Understanding and Working With the Federal Tax Law

Using the following choices, show the justification for each provision of the tax law listed. -A small business corporation can elect to avoid the corporate income tax.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Import taxes (customs duties)

Using the following choices, show the justification for each provision of the tax law listed. -A tax credit for amounts spent to furnish care for children while the parent is at work.

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for certain expenses (interest and taxes) incident to home ownership.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Office audit

Using the following choices, show the justification for each provision of the tax law listed. -Contributions to charitable organizations are deductible.

Using the following choices, show the justification for each provision of the tax law listed. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Income tax amnesty

Using the following choices, show the justification for each provision of the tax law listed. -A bribe to the local sheriff, although business related, is not deductible.

Using the following choices, show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (nonfossil) fuels.

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for qualified tuition paid to obtain higher education.

Using the following choices, show the justification for each provision of the tax law listed. -Tax brackets are increased for inflation.

Using the following choices, show the justification for each provision of the tax law listed. -A Federal deduction for state and local income taxes paid.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Export taxes

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for interest on student loans.

Using the following choices, show the justification for each provision of the tax law listed. -A Federal deduction for state and local sales taxes paid.

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for contributions by an employee to certain retirement plans.

Using the following choices, show the justification for each provision of the tax law listed. -Tax credits for home improvements that conserve energy.

Using the following choices, show the justification for each provision of the tax law listed. -Additional depreciation deduction allowed for the year the asset is acquired.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -"Pay as you go" (paygo)