Question 1

With respect to the income tax formula,which of the following statements is incorrect?

Accepted Answer

A)   The simplified income tax formula is only applicable to taxpayers with taxable income less than $100,000.
B)   Taxpayers are allowed certain deductions from income.
C)   For many taxpayers,the simple income tax formula is sufficient to determine tax liability.
D)   When calculating the tax refund or tax due with the return,taxpayers need to subtract tax payments and tax credits from their tax liability.E) None of the above
F) C) and D)

Question 2

For equivalent amounts of gross income,a single person will have a higher tax liability than will married persons filing jointly.

Accepted Answer

A) True 
 B)False

Question 3

Interest payers (banks,savings and loans,insurance companies,etc.) report interest earnings to taxpayers on a:

Accepted Answer

A)   Form W-2-INT.
B)   Form 1099-INT.
C)   Form 1099-INC.
D)   Form 4070.E) A) and C)
F) B) and C)

Question 4

A state or local sales tax is an example of a:

Accepted Answer

A)   Progressive rate structure.
B)   Proportional rate structure.
C)   Regressive rate structure.
D)   Recessive tax structure.E) None of the above
F) All of the above

Question 5

On Form 1040EZ,the permitted deduction from income for married taxpayers is:

Accepted Answer

A)   $1,500.
B)   $10,150.
C)   $20,300.
D)   $30,450.E) A) and C)
F) B) and C)

Question 6

Circular 230 applies only to Certified Public Accountants and Enrolled Agents.

Accepted Answer

A) True 
 B)False

Question 7

All individual income tax returns follow the structure of the simplified tax formula.

Accepted Answer

A) True 
 B)False

Question 8

On Form 1040EZ,the permitted deduction from income for a married filing jointly taxpayer is:

Accepted Answer

A)   $1,500.
B)   $10,150.
C)   $20,300.
D)   None of these.E) A) and C)
F) B) and D)

Question 9

Which of the following statements is true with respect to marginal and average tax rates under a progressive tax structure?

Accepted Answer

A)   Marginal rates are always larger than average rates.
B)   Marginal rates are always smaller than average rates.
C)   Average rates can only be calculated for taxpayers with income over $100,000.
D)   Average rates are never more than marginal rates.E) All of the above
F) B) and C)

Question 10

Jake earned $15,000 and paid $1,500 of income tax,while Jill earned $40,000 and paid $3,000 of income tax.The structure of the tax their income is subject to is:

Accepted Answer

A)   Progressive.
B)   Proportional.
C)   Regressive.
D)   Flat.E) A) and B)
F) C) and D)

Question 11

Tameka has taxable income of $59,225 that is taxed as follows:  Her average tax rate is:

Accepted Answer

A)   25%.
B)   18%.
C)   15%.
D)   10%.E) A) and D)
F) A) and C)

Question 12

The average tax rate is the total tax liability divided by the taxable income.

Accepted Answer

A) True 
 B)False

Question 13

The following court hears only tax cases:

Accepted Answer

A)   U.S.Court of Appeals.
B)   U.S.Court of Federal Claims.
C)   U.S.District Court.
D)   U.S.Tax Court.E) B) and D)
F) A) and D)

Question 14

For equivalent amounts of taxable income,the total tax liability of a single individual:

Accepted Answer

A)   Will be less than married filing jointly.
B)   Will be more than married filing jointly.
C)   Will be more than married filing separately.
D)   Cannot be determined with the information provided.E) A) and D)
F) B) and C)

Question 15

What are Revenue Rulings and Revenue Procedures?

Accepted Answer

Revenue Rulings (Rev.Rul.)and Revenue Pr...

Question 16

The least-complex individual income tax return is a Form:

Accepted Answer

A)   1040.
B)   1040A.
C)   1040EZ.
D)   1040 Simple.E) C) and D)
F) B) and D)

Question 17

Under the provisions of Circular 230,paid tax preparers must:

Accepted Answer

A)   Pass a competency examination.
B)   Inform the client if the client has made an error in a document submitted to the IRS.
C)   Provide a covered opinion.
D)   Be an Enrolled Agent.E) C) and D)
F) B) and C)

Question 18

Determine the tax liability in each of the following cases.
a.Single individual,taxable income of $44,985.
b.Married couple,taxable income of $89,717.
c.Single individual,wage income of $86,437.No other sources of income.

Accepted Answer

Answers are derived ...

Question 19

Which of the following is an administrative source of tax law?

Accepted Answer

A)   Revenue Ruling.
B)   IRS Regulation.
C)   Private Letter Ruling.
D)   All of these.E) All of the above
F) C) and D)

Question 20

Which of the following statements is true?

Accepted Answer

A)   Compensation for services includes bonuses and severance pay.
B)   Taxpayers who use a Form 1040EZ are not required to report any interest income in excess of $1,500.
C)   If income tax withholding is less than the calculated tax liability,there will be tax due with the return.
D)   Gross income is the "tax base" used to determine the amount of tax.E) A) and D)
F) A) and B)

Exam 1: Introduction to Taxation, the Income Tax Formula, and Form 1040ez

What are Revenue Rulings and Revenue Procedures?

Correct AnswerverifiedRevenue Rulings (Rev.Rul.)and Revenue Pr...View AnswerShow Answer

Determine the tax liability in each of the following cases. a.Single individual,taxable income of $44,985. b.Married couple,taxable income of $89,717. c.Single individual,wage income of $86,437.No other sources of income.

Correct AnswerverifiedAnswers are derived ...View AnswerShow Answer

A state or local sales tax is an example of a:

Correct AnswerverifiedShow Answer

For equivalent amounts of gross income,a single person will have a higher tax liability than will married persons filing jointly.

Correct AnswerverifiedShow Answer

Which of the following statements is true with respect to marginal and average tax rates under a progressive tax structure?

Correct AnswerverifiedShow Answer

The average tax rate is the total tax liability divided by the taxable income.

Correct AnswerverifiedShow Answer

For equivalent amounts of taxable income,the total tax liability of a single individual:

Correct AnswerverifiedShow Answer

Interest payers (banks,savings and loans,insurance companies,etc.) report interest earnings to taxpayers on a:

Correct AnswerverifiedShow Answer

Jake earned $15,000 and paid $1,500 of income tax,while Jill earned $40,000 and paid $3,000 of income tax.The structure of the tax their income is subject to is:

Correct AnswerverifiedShow Answer

On Form 1040EZ,the permitted deduction from income for a married filing jointly taxpayer is:

Correct AnswerverifiedShow Answer

Tameka has taxable income of $59,225 that is taxed as follows: Her average tax rate is:

Correct AnswerverifiedShow Answer

The following court hears only tax cases:

Correct AnswerverifiedShow Answer

On Form 1040EZ,the permitted deduction from income for married taxpayers is:

Correct AnswerverifiedShow Answer

With respect to the income tax formula,which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

All individual income tax returns follow the structure of the simplified tax formula.

Correct AnswerverifiedShow Answer

Under the provisions of Circular 230,paid tax preparers must:

Correct AnswerverifiedShow Answer

The least-complex individual income tax return is a Form:

Correct AnswerverifiedShow Answer

Circular 230 applies only to Certified Public Accountants and Enrolled Agents.

Correct AnswerverifiedShow Answer

Which of the following is an administrative source of tax law?

Correct AnswerverifiedShow Answer

Correct Answer
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Revenue Rulings (Rev.Rul.)and Revenue Pr...
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