Question 1

Using the choices provided below, 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

The answer of Using the choices provided below, show the...

Question 2

Using the choices provided below, 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 choices provided below, show the...

Question 3

Using the choices provided below, 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 the corporate income tax is primarily based on economic considerations. The provision is intended to encourage entrepreneurship and small business growth by reducing tax burdens on these entities. By allowing small businesses to retain more of their profits, they have more resources to invest in their businesses, which can spur job creation and economic growth.

Question 4

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

Accepted Answer

The answer of Using the choices provided below, show the...

Question 5

Using the choices provided below, 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

This provision of the tax law is based on social considerations, as it recognizes the need for working parents to have access to child care and aims to support the costs associated with it. This is particularly important for low income families who may struggle to afford quality child care.

Question 6

Using the choices provided below, 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 justification for allowing an additional depreciation deduction for the year the asset is acquired falls under economic considerations. This provision encourages businesses to invest in new assets and equipment, which helps stimulate economic growth and productivity. By allowing a larger deduction in the first year, businesses can offset a larger portion of the cost of the asset, which can help increase cash flow and profits. This provision also acknowledges that the value of most assets declines over time, so it makes sense to allow a larger deduction in the first year when the asset is new and at its highest value.

Question 7

Using the choices provided below, 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 choices provided below, show the...

Question 8

Using the choices provided below, 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 primarily based on economic considerations. It is intended to incentivize people to own homes and invest in real estate, which in turn helps stimulate the economy. Additionally, the deduction can help make home ownership more affordable by reducing the tax burden for individuals who would otherwise be deterred from purchasing a home due to high interest and tax payments.

Question 9

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

Accepted Answer

The provision for deducting state and local income taxes paid is justified based on equity considerations, as it aims to ensure that taxpayers are not double taxed on their income. This deduction helps to eliminate the possibility of taxpayers paying taxes on the same income to both the federal government and their state or local government.

Question 10

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

Accepted Answer

The answer of Using the choices provided below, show the...

Question 11

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

Accepted Answer

The answer of Using the choices provided below, show the...

Question 12

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

Accepted Answer

The provision of increasing tax brackets for inflation is primarily driven by equity considerations. Without adjusting for inflation, taxpayers would be pushed into higher tax brackets due to inflationary effects, resulting in an unfair tax burden. By adjusting tax brackets for inflation, taxpayers are taxed based on their real income and ensures a fair distribution of tax burden.

Question 13

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

Accepted Answer

This provision can be justified by economic considerations. Encouraging employee contributions to retirement plans helps to incentivize long-term saving and investment, which can benefit the overall economy by increasing capital formation and investment opportunities. Additionally, by reducing taxable income for employees who contribute to retirement plans, this provision can also help to stimulate consumer spending and economic growth.

Question 14

Using the choices provided below, 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

Rapid expensing of pollution control devices incentivizes companies to invest in cleaner technology and reduces the economic burden of compliance with environmental regulations.

Question 15

Using the choices provided below, show the justification for each provision of the tax law listed.
-A deduction for certain income from manufacturing activities.

Accepted Answer

The deduction for certain income from manufacturing activities can be justified based on economic considerations, as it encourages the growth of the manufacturing industry by reducing the tax burden on income derived from such activities. This can lead to increased production, job creation, and overall economic growth.

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

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

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

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

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

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

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

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

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

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

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

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

Using the choices provided below, 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.

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for certain income from manufacturing activities.