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| 1 | |
The Sixteenth Amendment to the U.S. Constitution provides the legal and statutory authority for the administration and enforcement of income taxes. |
| | A) | True |
| | B) | False |
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| 2 | |
The U.S. individual income tax system is an example of a proportional tax rate structure. |
| | A) | True |
| | B) | False |
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| 3 | |
The marginal tax rate is the proportion of tax paid on the first dollar of taxable income. |
| | A) | True |
| | B) | False |
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| 4 | |
The simplified tax formula can only be used by individuals with simple income tax returns. |
| | A) | True |
| | B) | False |
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| 5 | |
To be eligible to file the 1040A or 1040EZ forms, the taxpayer can only have taxable wages and limited interest income. |
| | A) | True |
| | B) | False |
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| 6 | |
The definition of wages includes tips. |
| | A) | True |
| | B) | False |
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| 7 | |
Individuals who file a Form 1040EZ will determine their tax liability with reference to the tax tables. |
| | A) | True |
| | B) | False |
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| 8 | |
For equivalent amounts of gross income, a single person will have a higher tax liability than will married persons filing jointly. |
| | A) | True |
| | B) | False |
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| 9 | |
The courts issue Private Letter Rulings when a taxpayer requests a ruling on a certain tax situation. |
| | A) | True |
| | B) | False |
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| 10 | |
Rev. Proc. 87–56 was the 87th Revenue Procedure issued in 1956. |
| | A) | True |
| | B) | False |
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| 11 | |
A tax rate that remains the same as the tax base increases is an example of what kind of tax rate structure? |
| | A) | Progressive |
| | B) | Proportional |
| | C) | Regressive |
| | D) | Recessive |
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| 12 | |
Sallie earned $25,000 and paid $2,000 of income tax; Theodore earned $35,000 and paid $2,900 of income tax. The tax rate structure they are subject to is: |
| | A) | Progressive |
| | B) | Proportional |
| | C) | Regressive |
| | D) | Recessive |
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| 13 | |
Sallie earned $85,000 and paid $5,950 of income tax; Theodore earned $33,000 and paid $2,310 of income tax. The tax rate structure they are subject to is: |
| | A) | Progressive |
| | B) | Proportional |
| | C) | Regressive |
| | D) | Recessive |
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| 14 | |
Which of the following is an example of a proportional tax? |
| | A) | Federal income tax. |
| | B) | State and local taxes levied on property. |
| | C) | Sales tax. |
| | D) | Social Security taxes. |
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| 15 | |
With respect to the income tax formula, which of the following statements is correct? |
| | A) | Taxable income is multiplied by a single tax rate to determine tax liability. |
| | B) | It is almost always the case that the tax return will either show a tax refund or an additional tax liability. |
| | C) | Total income and taxable income are the same number. |
| | D) | Tax credits are not used when making the calculations. |
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| 16 | |
Which of the following statements is false with respect to marginal and average tax rates? |
| | A) | For most taxpayers, the average rate is larger than the marginal rate. |
| | B) | The average rate is always more than the lowest marginal rate and less than the highest marginal rate. |
| | C) | The average rate is the percentage of tax paid on the entire amount of taxable income. |
| | D) | The marginal rate is the proportion of tax paid on the next dollar of taxable income. |
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| 17 | |
Tameka has taxable income of $37,000 that is taxed as follows:
| $7,825 x 10% = | $ 782.50 | | ($31,850-$7,825) x 15% = | 3,603.75 | | ($37,000-$31,850) x 25% = | 1,287.50 | | Total Tax | $ 5,673.75 |
Her marginal tax rate is: |
| | A) | 10%. |
| | B) | 15% |
| | C) | 15.33% |
| | D) | 25%. |
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| 18 | |
Tameka has taxable income of $37,000 that is taxed as follows:
| $7,825 x 10% = | $ 782.50 | | ($31,850-$7,825) x 15% = | 3,603.75 | | ($37,000-$31,850) x 25% = | 1,287.50 | | Total Tax | $ 5,673.75 |
Her marginal tax rate is: |
| | A) | 10%. |
| | B) | 15% |
| | C) | 15.33% |
| | D) | 25%. |
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| 19 | |
Which of the following would disqualify a taxpayer from filing a Form 1040EZ? |
| | A) | the taxpayer was single |
| | B) | the taxpayer has interest income of $1,900 |
| | C) | the taxpayer was age 63 |
| | D) | the taxpayer had no dependents |
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| 20 | |
The least-complex individual income tax return is a Form |
| | A) | 1040 |
| | B) | 1040A |
| | C) | 1040EZ |
| | D) | 1040 Simple |
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| 21 | |
Taxpayers can file a Form 1040EZ if they file using which of the following: |
| | A) | Married filing separately. |
| | B) | Head of household. |
| | C) | Married filing jointly. |
| | D) | Qualifying widow(er). |
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| 22 | |
Unemployment compensation income is reported to a taxpayer on a Form |
| | A) | W-2 |
| | B) | 1099-G |
| | C) | 1099-UN |
| | D) | 1099-INT |
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| 23 | |
On Form 1040EZ, the permitted deduction from income for a married filing jointly taxpayer is: |
| | A) | $0 |
| | B) | $8,450 |
| | C) | $10,000 |
| | D) | $16,900 |
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| 24 | |
Which of the following statements is true? |
| | 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 withholdings are less than the calculated tax liability, there will always be tax due with the return. |
| | D) | Gross income is the "tax base" used to determine the amount of tax. |
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| 25 | |
The tax liability for a single individual with taxable income of $88,211 is: |
| | A) | $18,814. |
| | B) | $18,810. |
| | C) | $14,904. |
| | D) | $14,900. |
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| 26 | |
Horace properly completed his Form 1040EZ tax return and received a refund from the IRS of $649. Horace had income tax withholdings during the year of $2,985. His tax liability for the year was |
| | A) | $3,634 |
| | B) | $2,985 |
| | C) | $2,336 |
| | D) | d. $ 649 |
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| 27 | |
Which of the following refers to an income tax regulation? |
| | A) | Reg. §1.162-5. |
| | B) | Reg. §20.2032-1. |
| | C) | Reg. §25.2503-4. |
| | D) | Reg. §31.3301-1. |
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| 28 | |
Which of the following types of Regulations take the place of the Internal Revenue Code and have the full effect of law? |
| | A) | Final. |
| | B) | Legislative. |
| | C) | Temporary. |
| | D) | Proposed. |
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| 29 | |
Which of the following courts hears only tax cases? |
| | A) | U.S. Court of Appeals. |
| | B) | U.S. Court of Federal Claims. |
| | C) | U.S. Tax Court |
| | D) | U.S. District Court |
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| 30 | |
Which of the following statements is correct? |
| | A) | The Internal Revenue Code pertains only to income taxes. |
| | B) | Private Letter Rulings are issued by the IRS and are considered to be general tax authority. |
| | C) | Temporary Regulations expire three years after issuance. |
| | D) | Upon deciding a tax case, the court will issue a Revenue Ruling. |
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