Question 1

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

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 4

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

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Question 5

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

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Question 6

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 7

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 8

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 9

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 2014. In reviewing her 2013 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 10

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 11

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

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Question 12

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

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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.
-Wherewithal to pay concept

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Question 14

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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Question 15

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 16

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

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Question 17

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 18

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

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Question 19

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

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Question 20

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?

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

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

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

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?

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

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

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

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 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?

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

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

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

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.

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

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

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

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?