Question 1

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Accepted Answer

This is because taxpayers may be more willing to invest in and properly report business use personalty in order to maximize their deductions, while personal use personalty may not have the same level of financial incentive for proper reporting. Additionally, personal use personalty can be more difficult to track and value accurately.

Question 2

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

Accepted Answer

The Sixteenth Amendment validated only the tax on individuals.The income tax on corporations had been previously sanctioned by the courts.

Question 3

The pay­as­you­go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Accepted Answer

Pay-as-you-go refers to the withholding provisions applicable to wages and other types of income and adds convenience to the tax system.

Question 4

Sales made by mail order are not exempt from the application of a general sales (or use)tax.

Accepted Answer

They are not exempt but compliance is sporadic.

Question 5

There is a Federal excise tax on hotel occupancy.

Accepted Answer

The Federal government does not impose an excise tax on hotel occupancy; such taxes are typically levied at the state or local level.

Question 6

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

Conversion from residential to rental use will increase the taxes.Furthermore,Mona's mother may have had a senior citizen exemption on the property,which will no longer be appropriate.Lastly,the furnishings in the rent house could now be subject to an ad valorem tax on personalty.

Question 7

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution)levied tax rates from a low of 2% to a high of 6%.

Accepted Answer

This is true according to the historical tax rates. The first income tax law in 1913 set tax rates from 1% to 7% on incomes over $3,000 ($4,000 for married couples). However, the tax rates were later modified in 1916 with a range from 2% to 15%.

Question 8

Even if property tax rates are not changed,the amount of ad valorem taxes imposed on realty may not remain the same.

Accepted Answer

Property taxes will vary in accordance with changes in the assessed value of the property.

Question 9

The FICA tax (Medicare component)on wages is progressive since the tax due increases as wages increase.

Accepted Answer

The FICA tax (Medicare component)is proportional because the rate is constant regardless of the wages earned.

Question 10

Like the Federal counterpart,the amount of the state excise taxes on gasoline varies from state to state.

Accepted Answer

The Federal excise tax rate on gasoline remains constant.

Question 11

Not all of the states that impose a general sales tax also have a use tax.

Accepted Answer

Every state that has a general sales tax also has a use tax.There are no states with only a sales or use tax.

Question 12

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Accepted Answer

According to data from the Congressional Budget Office and the Internal Revenue Service, individual income taxes account for approximately 47% of total Federal tax revenue, while corporate income taxes account for approximately 7%. Therefore, the Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Question 13

Currently,the Federal income tax is less progressive than it ever has been in the past.

Accepted Answer

Currently,the Federal income tax has six rates.At one time,it had two rates.

Question 14

The Federal excise tax on cigarettes is an example of a proportional tax.

Accepted Answer

The tax is a flat $1.01 per pack.

Question 15

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

Accepted Answer

By definition,a fixture becomes part of the real estate to which it is attached.

Question 16

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

The estate and gift taxes are levied on the transfer of wealth from one person to another and are structured as progressive taxes.

Question 17

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Accepted Answer

No such restriction is imposed.Although many of the European luxury and sports car manufacturers were initially hit hard by the tax,the law is silent on this matter.

Question 18

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Accepted Answer

Approximately 60% use tax return preparers,while slightly more than 32% purchase tax return software.

Question 19

A Federal excise tax is no longer imposed on admission to theaters.

Accepted Answer

Such tax has been rescinded.

Question 20

Before the Sixteenth Amendment to the Constitution was ratified,there was no valid Federal income tax on individuals.

Accepted Answer

There existed a Federal income tax during the Civil War that was sanctioned by the U.S.Supreme Court.

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

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

The payasyougo feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Sales made by mail order are not exempt from the application of a general sales (or use)tax.

There is a Federal excise tax on hotel occupancy.

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution)levied tax rates from a low of 2% to a high of 6%.

Even if property tax rates are not changed,the amount of ad valorem taxes imposed on realty may not remain the same.

The FICA tax (Medicare component)on wages is progressive since the tax due increases as wages increase.

Like the Federal counterpart,the amount of the state excise taxes on gasoline varies from state to state.

Not all of the states that impose a general sales tax also have a use tax.

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Currently,the Federal income tax is less progressive than it ever has been in the past.

The Federal excise tax on cigarettes is an example of a proportional tax.

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

The Federal estate and gift taxes are examples of progressive taxes.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

A Federal excise tax is no longer imposed on admission to theaters.

Before the Sixteenth Amendment to the Constitution was ratified,there was no valid Federal income tax on individuals.

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

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

The pay­as­you­go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Sales made by mail order are not exempt from the application of a general sales (or use)tax.

There is a Federal excise tax on hotel occupancy.

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution)levied tax rates from a low of 2% to a high of 6%.

Even if property tax rates are not changed,the amount of ad valorem taxes imposed on realty may not remain the same.

The FICA tax (Medicare component)on wages is progressive since the tax due increases as wages increase.

Like the Federal counterpart,the amount of the state excise taxes on gasoline varies from state to state.

Not all of the states that impose a general sales tax also have a use tax.

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Currently,the Federal income tax is less progressive than it ever has been in the past.

The Federal excise tax on cigarettes is an example of a proportional tax.

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

The Federal estate and gift taxes are examples of progressive taxes.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

A Federal excise tax is no longer imposed on admission to theaters.

Before the Sixteenth Amendment to the Constitution was ratified,there was no valid Federal income tax on individuals.

The payasyougo feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.