Question 1

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Tax fraud suspected

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Question 2

Under what conditions is it permissible, from an ethical standpoint, for a CPA firm to outsource tax return preparation to a third party?

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Question 3

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Discriminant Index Function (DIF)

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Question 4

Melinda has been referred to you by one of your clients. In the past, she has prepared her own income tax returns, but she has become overwhelmed by the increased complexity of the tax law. Consequently, Melinda wants you to prepare her return for calendar year 2017. In reviewing her 2016 return, you note that she has claimed as a deduction the entire cost of a business building that should have been capitalized and depreciated. What course of action should you follow?

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Question 5

Your client, Connie, won $12,000 in a football office pool. She sees no reason to include it in her income for several reasons. First, the amount won will not be reported to the IRS. Second, as an average income employee, she is unlikely to be audited by the IRS. Third, she feels that she has probably lost this much in other past office pools. How do you respond?

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Question 6

In connection with facilitating the function of the IRS in the administration of the tax laws, comment on the utility
of the following:
a.An increase in the amount of the standard deduction.
b.Dollar and percentage limitations on the deduction of personal casualty losses.
c.Availability of interest and penalties for taxpayer noncompliance.

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Question 7

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Jock tax

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Question 8

Congress reacts to judicial decisions that interpret the tax law in different ways. When it approves of a decision, Congress may act to amend the Code to incorporate the holding. When it disapproves, Congress may amend the Code to nullify its effect. Give an example of each one of these congressional reactions.

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Question 9

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.
a.What is the justification for this relief measure?
b.What happens if the proceeds are not entirely reinvested?

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Question 10

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Decoupling

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Question 11

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Revenue neutrality

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Question 12

The tax law allows an income tax deduction (or a credit) for foreign income taxes. Explain why.

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Question 13

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Wherewithal to pay concept

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Question 14

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

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Question 15

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

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Question 16

In terms of revenue neutrality, comment on a tax cut enacted by Congress that:
a.contains revenue offsets.
b.includes a sunset provision.

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Question 17

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Mitigation of the annual accounting period concept

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Question 18

Brayden files his Federal income tax return by April 15, but does not pay the tax. Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties. Is Brayden's assumption correct?

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Question 19

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
a.Deferral of gains from involuntary conversions
b.Carryback and carryforward of net operating losses
c."No change" is one possible result
d.State income tax applied to visiting nonresident
e.IRS special agent
f.Undoing the "piggyback" result
g.Ideal budget goal as to new tax legislation
h.Every state that has a general sales tax has one
i.Imposed by all states and the Federal government
j.Imposed by some states but not the Federal government
k.Imposed only by the Federal government
l.No correct match provided
-Revenue Agent's Report (RAR)

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Question 20

The tax law contains various provisions that encourage home ownership.
a.On what basis can this objective be justified?
b.Are there any negative considerations? Explain.

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Quiz 1: An Introduction to Taxation and Understanding Federal Tax Law

Under what conditions is it permissible, from an ethical standpoint, for a CPA firm to outsource tax return preparation to a third party?

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions. a.What is the justification for this relief measure? b.What happens if the proceeds are not entirely reinvested?

The tax law allows an income tax deduction (or a credit) for foreign income taxes. Explain why.

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

In terms of revenue neutrality, comment on a tax cut enacted by Congress that: a.contains revenue offsets. b.includes a sunset provision.

Brayden files his Federal income tax return by April 15, but does not pay the tax. Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties. Is Brayden's assumption correct?

The tax law contains various provisions that encourage home ownership. a.On what basis can this objective be justified? b.Are there any negative considerations? Explain.