Question 1

Noah dies in 2012 with an estate worth $12 million.Under his will,$6 million passes to his wife while $6 million goes to his church.What is Noah's Federal estate tax result?

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Question 2

Virtually all state income tax returns contain checkoff boxes for donations to various causes.On what grounds has this procedure been criticized?

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Question 3

With regard to state income taxes,explain what is meant by the "jock tax"?

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Question 4

What are the pros and cons of the following state and local tax provisions?

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Question 5

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures:

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Question 6

Due to the population change,the Goose Creek School District has decided to close one of its high schools.Since it has no further need of the property,the school is listed for sale.The two bids it receives are as follows:
  The United Methodist Church would use the property to establish a sectarian middle school.Planet,a well-known car dealership,would revamp the property and operate it as a branch location.
If you were a member of the School District board,what factors would you consider in evaluating the two bids?

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The answer of Due to the population change,the Goose Creek...

Question 7

In 2010,Deborah became 65 years old.In 2011 she added a swimming pool,and in 2012 she converted the residence to rental property and moved into an assisted living facility.Since 2009,Deborah's ad valorem property taxes have decreased once and increased twice.Explain.

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The answer of In 2010,Deborah became 65 years old.In 2011...

Question 8

Several years ago,Lucas purchased extra grazing land for his ranch at a cost of $120,000.In 2012,the land is condemned by the state for development as a highway maintenance depot.Under the condemnation award,Lucas receives $300,000 for the land.Within the same year,he replaces the property with other grazing land.What is Lucas's tax situation if the replacement land cost:

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Question 9

On his 2012 income tax return,Logan omitted income and overstated deductions to the extent that his income tax was understated by $400,000.Disregarding any interest element,what is Logan's penalty if the understatement was due to:

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Question 10

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

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Question 11

Timothy recently converted a warehouse into apartment lofts,which he is renting to single professionals.In making the conversion,he emphasized improvements that were portable in nature.Thus,the sprinkler system,heating and cooling units,and room dividers are all removable from the building.In terms of ad valorem property taxes,what was Timothy trying to accomplish?

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Question 12

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

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Question 13

Ava,an estate planner,is advising her wealthier clients to make any large gifts to family members before 2013.Why?

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Question 14

In 1985,Roy leased real estate to Drab Corporation for 20 years.Drab Corporation made significant capital improvements to the property.In 2005,Roy decides not to renew the lease and vacates the property.At that time,the value of the improvements is $800,000.Roy sells the real estate in 2012 for $1,200,000 of which $900,000 is attributable to the improvements.How and when is Roy taxed on the improvements made by Drab Corporation?

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Question 15

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

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Question 16

Morgan inherits her father's personal residence including all of the furnishings.She plans to add a swimming pool and sauna to the property and rent it as a furnished house.What are some of the ad valorem property tax problems Morgan can anticipate?

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Question 17

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as equality is concerned?

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Question 18

In early July 2012,Gavin is audited by the IRS and a large deficiency is assessed.In October of the same year,his income tax return for the state is audited.What has probably happened?

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The answer of In early July 2012,Gavin is audited by...

Question 19

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

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Question 20

A lack of compliance in the payment of use taxes can be resolved by several means.In this regard,comment on the following:

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