2.The Federal estate and gift taxes are examples of progressive rate taxes.

Name: Class: Date: CH 1 Introduction to Taxation Powered by Cognero Page 1 Indicate whether the statement is true or false.

1.The Medicare component of the FICA tax (1.45% on wages) is progressive since the tax due increases as wages increase.

• True
• False

2.The Federal estate and gift taxes are examples of progressive rate taxes.

• True
• False

3.The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive or regressive).

• True
• False

4.Currently, the Federal corporate income tax is less progressive than the individual income tax.

• True
• False

5.Mona inherits her mother’s personal residence, which she converts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levied on the properties.

• True
• False

6.A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

• True
• False

7.Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

• True
• False

8.The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

• True
• False

9.An excise tax is often used to try to influence behavior.

• True
• False

10.There is a Federal excise tax on hotel occupancy.

• True
• False

11.The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.South-Western Federal Taxation 2024, Essentials of Taxation, Individuals and Business Entities, 27e Nellen, Cuccia, Persellin, Young (Test Bank, 100% Original Verified, A+ Grade) 1 / 4

Name:

Class:

Date:

CH 1 Introduction to Taxation

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• True
• False

• The amount of the state excise taxes on gasoline varies from state to state.
• True
• False

• Not all of the states that impose a general sales tax also have a use tax.
• True
• False

• Sales made over the internet are not exempt from the application of a general sales (or use) tax.
• True
• False

• Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.
• True
• False

• States impose either a state income tax or a general sales tax, but not both types of taxes.
• True
• False

• A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no

such taxes.

• True
• False

• On transfers by death, the Federal government relies on an estate tax, while states may impose an estate tax, an

inheritance tax, both taxes, or neither tax.

• True
• False

• An inheritance tax is a tax on a decedent’s right to pass property at death.
• True
• False

• One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from

being accumulated within a family unit.

• True
• False

• Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be

due on Clint’s death.

• True
• False
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Name:

Class:

Date:

CH 1 Introduction to Taxation

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• Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same

rate.

• True
• False

• The annual exclusion, currently $17,000, is available for gift and estate tax purposes.
• True
• False

• In 2023, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not

made a taxable gift.

• True
• False

• Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be

allowed as to these gifts.

• True
• False

• One of the motivations for making a gift is to save on income taxes.
• True
• False

• The formula for the Federal income tax on corporations is the same as that applicable to individuals.
• True
• False

• A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.
• True
• False

• For state income tax purposes, some states allow a credit for dependents rather than a deduction.
• True
• False

• Some states use their state income tax return as a means of collecting unpaid use tax.
• True
• False

• No state may offer an income tax amnesty program more than once.
• True
• False

• For Federal income tax purposes, there never has been a general amnesty period.
• True 3 / 4

Name:

Class:

Date:

CH 1 Introduction to Taxation

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• False

• Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
• True
• False

• When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax

purposes.

• True
• False

• The principal objective of the FUTA tax is to provide some measure of retirement security.
• True
• False

• Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
• True
• False

• A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA

coverage.

• True
• False

• Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
• True
• False

• A major advantage of a flat tax type of income tax is its simplicity.
• True
• False

• The objective of pay-as-you-go (paygo) is to improve administrative feasibility.
• True
• False

• When Congress enacts a tax cut that is phased in over a period of years, revenue neutrality is achieved.
• True
• False

• A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
• True
• False

• The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain

additional education. These provisions can be justified on both economic and equity grounds.

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