Question 1

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

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Question 2

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 3

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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Question 4

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 5

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 6

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 7

Congressman Smith wants to impose a new tax on sugar drinks. Analyze this proposal against the principles of equity, simplicity and neutrality.

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Question 8

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

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Question 9

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 in Federally- declared disaster areas.
c. Availability of interest and penalties for taxpayer noncompliance.

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Question 10

Ultimately, most taxes are paid by individuals. Explain what this means in terms of income and payroll taxes paid by a corporation.

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Question 11

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

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

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?

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)?

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.

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 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?

Congressman Smith wants to impose a new tax on sugar drinks. Analyze this proposal against the principles of equity, simplicity and neutrality.

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

Ultimately, most taxes are paid by individuals. Explain what this means in terms of income and payroll taxes paid by a corporation.