Question 1

Match each term with the correct statement below.
-Used by persons who do not itemize deductions on their return.

Accepted Answer

The standard deduction is a fixed dollar amount that reduces the income on which you are taxed and varies according to your filing status. It is used by taxpayers who do not itemize deductions on their return.

Question 2

Barry has prepared the following 2017 income tax estimate for his sister,Sylvia.Sylvia is single,age 32,and has no children.Sylvia is an employee of General Motors and rents an apartment.Her only investment is a savings bank account.
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Identify the errors,if any,in Barry's income tax estimate.
Additional calculations are not required.

Accepted Answer

The answer of Barry has prepared the following 2017 income...

Question 3

Harriet and Harry are married and have total gross income of $65,000.Their allowable deductions for adjusted gross income total $1,500 and they have $4,400 of allowable itemized deductions.What are Harriet and Harry's taxable income and income tax liability for 2017?

Accepted Answer

The answer of Harriet and Harry are married and have...

Question 4

Match each term with the correct statement below.
-Current period expenditure incurred in order to earn income.

Accepted Answer

An expense is a current period expenditure incurred in order to earn income. It represents the cost of doing business and is used to calculate net income by subtracting expenses from revenues.

Question 5

Match each term with the correct statement below.
-A taxpayer is responsible for determining his/her tax liability and timely paying the tax due.

Accepted Answer

The self-assessment system in taxation means that it is the taxpayer's responsibility to calculate their own tax liability and ensure that they pay any taxes owed by the due date. This system relies on individuals and businesses to accurately report their income and calculate taxes due, rather than having the government assess tax liability for each taxpayer.

Question 6

Match each term with the correct statement below.
-Subtractions from gross income specifically allowed by the tax law.

Accepted Answer

Deduction refers to subtractions from gross income specifically allowed by the tax law.

Question 7

On December 28,2017,Doris and Dan are considering one last financial decision for 2017,a contribution of $1,000 to the American Diabetes Association.If they make the $1,000 contribution,it will be fully deductible on their 2017 income tax return.Their filing status is married filing jointly.Their 2017 taxable income before this contribution is $150,000.If they make this contribution,what is its after-tax cost?

Accepted Answer

The answer of On December 28,2017,Doris and Dan are considering...

Question 8

Match each term with the correct statement below.
-Direct reduction in the income tax liability often created by Congress to further a public purpose.

Accepted Answer

Tax credit is a direct reduction in the income tax liability often created by Congress to further a public purpose.

Question 9

Julia is single and earns a salary of $65,000.Her allowable deductions for adjusted gross income total $1,200 and she has $4,200 of allowable itemized deductions.What is Julia's taxable income and income tax liability for 2017?

Accepted Answer

The answer of Julia is single and earns a salary...

Question 10

What type of tax rate structure is indicated in the following example? Explain.

Accepted Answer

The answer of What type of tax rate structure is...

Question 11

Mo is a single taxpayer reporting $95,000 of gross income.In addition,Mo receives $5,000 of tax-exempt interest.
Required: Compute the following:
a.Mo's taxable income is ___________________.
b.Mo's tax liability is ____________________.
c.Mo's marginal tax rate is ____________________.
d.Mo's average tax rate is ____________________.
e.Mo's effective tax rate is ____________________.

Accepted Answer

The answer of Mo is a single taxpayer reporting $95,000...

Question 12

Match each term with the correct statement below.
-The payment of tax throughout the year as income is earned.

Accepted Answer

The pay-as-you-go concept refers to the method of paying tax on income as it is earned throughout the year, rather than paying a lump sum at the end of the year. This can be through withholding from wages or estimated tax payments for self-employed individuals.

Question 13

Match each term with the correct statement below.
-The common,customary,recurring type of income earned by taxpayers.

Accepted Answer

Ordinary income is the common, customary, recurring type of income earned by taxpayers.

Answer: K
 Real property refers to land and anything permanently attached to it, such as buildings.

Answer: L
 Self-assessment refers to the taxpayer being responsible for accurately reporting their own income and taxes owed.

Answer: M
 The standard deduction is a set amount that taxpayers can deduct from their income to reduce their taxable income.

Answer: N
 The statute of limitations sets a time limit for the IRS to audit a taxpayer or assess additional taxes.

Answer: P
 A tax credit is a dollar-for-dollar reduction of the taxes owed, unlike a deduction which reduces taxable income.

Question 14

Match each term with the correct statement below.
-Increases in wealth and recoveries of capital that Congress has decided should not be subject to income tax.

Accepted Answer

An exclusion is a type of income that is not subject to income tax, such as increases in wealth and recoveries of capital that Congress has decided should not be taxed.

Question 15

On January 4,2017,Owen died and left ranch land with a value of $300,000 to his brother,Victor.This transfer was purely donative with no expectation of anything in return.Victor transferred all of this land to his corporation,Circle C Ranch,Inc.Victor is the president and an active employee of the corporation.Victor's salary from the corporation is $40,000 per year.The ranch land is located in Torrent County,Texas.The Torrent Appraisal District appraises the property.
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From the above facts name six different types of federal,state,or local taxes that might have to be paid and name the entity that is liable to pay them.

Accepted Answer

The answer of On January 4,2017,Owen died and left ranch...

Question 16

Winfield Corporation recently purchased equipment that qualifies for a new tax incentive.The new incentive allows Winfield to either expense $100,000 of the cost of the equipment or claim a tax credit of 15% of the cost of the equipment.The cost of the equipment is $200,000.If the credit is elected,the first year depreciation will be $34,000.If Winfield chooses to expense $100,000 of the cost,the first year depreciation will be $20,000 on the remaining cost.Winfield's tax rate is either 34% or 39%.Under what conditions should Winfield elect to take the tax credit? Explain and show any calculations to support your answer.

Accepted Answer

The answer of Winfield Corporation recently purchased equipment that qualifies...

Question 17

Match each term with the correct statement below.
-The period of time during which a taxpayer and/or the IRS can correct a taxpayer's taxable income.

Accepted Answer

The statute of limitations refers to the period of time during which a taxpayer and/or the IRS can correct a taxpayer's taxable income.

Answer: C
 Excise tax refers to a tax on specific goods, such as gasoline or tobacco.

Answer: L
 Self-assessment refers to the process by which a taxpayer calculates their own tax liability.

Answer: M
 The standard deduction is a fixed amount that can be subtracted from a taxpayer's income to lower their taxable income.

Answer: I
 The pay-as-you-go concept refers to the idea that taxpayers should pay their taxes throughout the year, rather than in one lump sum at the end of the year.

Answer: K
 Real property refers to land and any structures attached to it.

Answer: A
 Ad valorem tax refers to a tax based on the value of property, such as a property tax.

Answer: B
 Deduction refers to an expense or other item that can be subtracted from a taxpayer's income before calculating their tax liability.

Answer: G
 Loss refers to a negative difference between the purchase price and sale price of an asset.

Answer: F
 Gain refers to a positive difference between the purchase price and sale price of an asset.

Answer: P
 Tax credit refers to a dollar-for-dollar reduction in the amount of tax owed by a taxpayer.

Answer: H
 Ordinary income refers to income that is earned through regular business activities, such as wages or salaries.

Answer: O
 Tax base refers to the amount of income or value subject to taxation.

Question 18

Raquel is a recent law school graduate.She is upset by an IRS Revenue Agent's Report on her income tax return that she must pay an additional $2,000 in tax on last year's income.Raquel tells you that she "...will take her case all the way to the Supreme Court." What is the probability Raquel will be able to take her case to the Supreme Court.

Accepted Answer

The answer of Raquel is a recent law school graduate.She...

Question 19

Match each term with the correct statement below.
-Land and any structures permanently attached to the land.

Accepted Answer

Real property refers to land and any structures that are permanently attached to the land, distinguishing it from personal property, which can be moved.

Question 20

Match each term with the correct statement below.
-The excess of the selling price of an asset over its tax basis.

Accepted Answer

Gain is the excess of the selling price of an asset over its tax basis.

Answer: K
 Real property refers to land and all the things permanently attached to it, such as buildings.

Answer: O
 Tax base refers to the amount of income, property, or other asset that is subject to taxation.

Answer: G
 Loss is the excess of the tax basis of an asset over its selling price.

Answer: H
 Ordinary income is income received from regular business activities or employment, and is subject to taxation at regular income tax rates.

Answer: L
 Self-assessment means taxpayers are responsible for reporting their own income and calculating their own tax liability.

Answer: P
 Tax credit directly reduces the amount of tax owed, rather than just reducing the taxable income.

Answer: N
 Statute of limitations refers to the time period during which the IRS can audit a tax return or assess additional taxes owed.

Answer: B
 Deduction allows taxpayers to subtract certain expenses from their taxable income, thereby reducing the amount of tax owed.

Answer: I
 Pay-as-you-go concept requires taxpayers to pay their tax liability throughout the year, through withholdings from their paychecks or estimated tax payments.

Answer: J
 Personal property refers to movable property that can be bought or sold, such as cars or furniture.

Answer: C
 Excise tax is a tax on specific types of goods or services, such as gasoline or cigarettes.

Answer: A
 Ad valorem tax is a tax based on the value of the property being taxed.

Answer: E
 Expense refers to the cost of doing business, and can be deducted from taxable income in certain circumstances.

Answer: M
 Standard deduction is a fixed amount, set by the IRS, that can be subtracted from taxable income without having to itemize deductions.

Quiz 1: Conceptual Foundations of Tax Law

Match each term with the correct statement below. -Used by persons who do not itemize deductions on their return.

Harriet and Harry are married and have total gross income of $65,000.Their allowable deductions for adjusted gross income total $1,500 and they have $4,400 of allowable itemized deductions.What are Harriet and Harry's taxable income and income tax liability for 2017?

Match each term with the correct statement below. -Current period expenditure incurred in order to earn income.

Match each term with the correct statement below. -A taxpayer is responsible for determining his/her tax liability and timely paying the tax due.

Match each term with the correct statement below. -Subtractions from gross income specifically allowed by the tax law.

Match each term with the correct statement below. -Direct reduction in the income tax liability often created by Congress to further a public purpose.

Julia is single and earns a salary of $65,000.Her allowable deductions for adjusted gross income total $1,200 and she has $4,200 of allowable itemized deductions.What is Julia's taxable income and income tax liability for 2017?

What type of tax rate structure is indicated in the following example? Explain.

Mo is a single taxpayer reporting $95,000 of gross income.In addition,Mo receives $5,000 of tax-exempt interest. Required: Compute the following: a.Mo's taxable income is _. b.Mo's tax liability is . c.Mo's marginal tax rate is . d.Mo's average tax rate is . e.Mo's effective tax rate is __.

Match each term with the correct statement below. -The payment of tax throughout the year as income is earned.

Match each term with the correct statement below. -The common,customary,recurring type of income earned by taxpayers.

Match each term with the correct statement below. -Increases in wealth and recoveries of capital that Congress has decided should not be subject to income tax.

Match each term with the correct statement below. -The period of time during which a taxpayer and/or the IRS can correct a taxpayer's taxable income.

Match each term with the correct statement below. -Land and any structures permanently attached to the land.

Match each term with the correct statement below. -The excess of the selling price of an asset over its tax basis.