Test Bank for South-

Test Bank for South- Western Federal Taxation 2023 Comprehensive, 46e James Young, Annette Nellen, David Maloney, Mark Persellin, Andrew Cuccia, Sharon Lassar, Brad Cripe (All Chapters Download link at the end of this file) 1 / 4

Name:

Class:

Date:

CH 01 An Introduction to Taxation and Understanding the Federal Tax Law

True / False

• Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns

without outside assistance.

• True
• False

ANSWER: True

• The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax

on corporations.

• True
• False

ANSWER: False

• The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax

rates from a low of 1% to a high of 6%.

• True
• False

ANSWER: True

• Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.
• True
• False

ANSWER: False

• The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
• True
• False

ANSWER: True

• The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle) of

certainty.

• True
• False

ANSWER: False

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

increase.

• True
• False

ANSWER: False

• The Federal estate and gift taxes are examples of progressive rate taxes.
• True
• False

ANSWER: True

• / 4

Name:

Class:

Date:

CH 01 An Introduction to Taxation and Understanding the Federal Tax Law

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

ANSWER: False

• Currently, the Federal corporate income tax is less progressive than the individual income tax.
• True
• False

ANSWER: True

• 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

ANSWER: True

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

ANSWER: False

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

same.

• True
• False

ANSWER: True

• 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

ANSWER: True

• An excise tax is often used to try to influence behavior.
• True
• False

ANSWER: True

• There is a Federal excise tax on hotel occupancy.
• True
• False

ANSWER: False

• The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.
• True 3 / 4

Name:

Class:

Date:

CH 01 An Introduction to Taxation and Understanding the Federal Tax Law

• False

ANSWER: False

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

ANSWER: True

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

ANSWER: False

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

ANSWER: True

• 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

ANSWER: True

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

ANSWER: 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

ANSWER: 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

ANSWER: True

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

ANSWER: False

• One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from
• / 4