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Multiple Choice Quiz
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1
Taxes influence personal decisions such as whether to buy or rent a house.
A)True
B)False
2
Jerry recently paid $20 in tolls for the Florida turnpike. The $20 payment is considered a tax.
A)True
B)False
3
Taxes are voluntary payments paid to a government for a specific benefit received by the specific taxpayer.
A)True
B)False
4
The federal income tax is an example of a regressive tax system.
A)True
B)False
5
The marginal tax rate is often used in tax planning.
A)True
B)False
6
The gift tax is imposed on the fair market value of items transferred upon death.
A)True
B)False
7
The reduced pre-tax rate of return on municipal bonds is an example of an explicit tax.
A)True
B)False
8
Horizontal equity means that two taxpayers with different amounts of income should pay different amounts of tax but fairly in relation to their ability to pay.
A)True
B)False
9
Which of the following is considered a tax?
A)Fees to register an automobile
B)Speeding ticket
C)Entrance fee for a national museum
D)Local surcharge for a homeowner to connect to city sewer service
E)1% local surcharge on hotel rooms to pay for city government
10
Which of the following is an example of a progressive tax system?
A)Social security tax
B)A sales tax
C)A proportional tax
D)U.S. Federal Income Tax
11
Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2012, how much federal tax will he owe?
A)$28,000
B)$21,460.50
C)$17,060
D)$15,000
E)None of the above
12
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2012, what is his average tax rate (rounded)?
A)28.00%
B)17.06%
C)21.46%
D)15.00%
E)None of the above
13
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2012, what is his effective tax rate (rounded)?
A)28.00%
B)15.51%
C)21.62%
D)19.51%
E)None of the above
14
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. If Marc earned an additional $80,000, what would his marginal tax rate be on the $80,000 (rounded)?
A)28.00%
B)28.08%
C)32.48%
D)33.00%
15
James invests $100,000 in a city of Athens bond that pays 8% interest. Alternatively, James could have invested the $100,000 in a bond recently issued by HighTech, Inc. that pays 10% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 25%. Which bond should James should choose and why?
A)The HighTech, Inc. bond because it earns a higher pre-tax rate of return
B)The HighTech, Inc. bond because it earns a higher after-tax rate of return
C)The city of Athens bond because it earns a higher pre-tax rate of return
D)The city of Athens bond because it earns a higher after-tax rate of return
E)James should be indifferent between the two bonds







Tax of Ind. and Bus. Ent. 2013Online Learning Center

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