Taxation for Decision Makers Chapters 1-2 Questions and Answers Latest Update 2025
Ad Valorem - Answers A tax based on the value of an item or property.
Average Tax Rate - Answers Total tax paid divided by total income.
Canons of Taxation - Answers Principles of taxation including equity, certainty, convenience, and
economy.
Estate Tax - Answers Tax on the transfer of property upon the owner's death.
C Corporation - Answers A legal entity that is separate from its owners and taxed independently.
Fiduciary - Answers A person or organization that acts on behalf of another in a position of trust.
Filing Status - Answers A taxpayer's classification for income tax purposes, such as single, married filing
jointly, etc.
Franchise Tax - Answers A tax levied on businesses for the privilege of operating as a corporation or LLC.
Gift Tax - Answers Tax on the transfer of property by one individual to another while receiving nothing,
or less than full value, in return.
Horizontal equity - Answers The idea that individuals in similar financial situations should be taxed at the
same rate.
Nexus - Answers The connection or link between a taxpayer and a state that allows the state to impose
tax obligations.
Marginal Tax Rate - Answers The tax rate paid on the last dollar of income earned.
Internal Revenue Code - Answers The main body of domestic statutory tax law in the United States.
Partnership - Answers A business structure in which two or more individuals manage and operate a
business in accordance with the terms and objectives set out in a Partnership Deed.
Progressive Tax System - Answers A tax system in which the rate of taxation increases as income
increases.
Proportional Tax System - Answers A tax system in which the same percentage of tax is levied from all
taxpayers, regardless of income.
Qualified Business Income - Answers Income from a partnership, S corporation, or sole proprietorship
that is eligible for a possible tax deduction.
Real Property Tax - Answers Tax on real estate, including land and any property attached to the land.
Ad Valorem - Answers A tax based on the value of an item or property.
Average Tax Rate - Answers Total tax paid divided by total income.
Canons of Taxation - Answers Principles of taxation including equity, certainty, convenience, and
economy.
Estate Tax - Answers Tax on the transfer of property upon the owner's death.
C Corporation - Answers A legal entity that is separate from its owners and taxed independently.
Fiduciary - Answers A person or organization that acts on behalf of another in a position of trust.
Filing Status - Answers A taxpayer's classification for income tax purposes, such as single, married filing
jointly, etc.
Franchise Tax - Answers A tax levied on businesses for the privilege of operating as a corporation or LLC.
Gift Tax - Answers Tax on the transfer of property by one individual to another while receiving nothing,
or less than full value, in return.
Horizontal equity - Answers The idea that individuals in similar financial situations should be taxed at the
same rate.
Nexus - Answers The connection or link between a taxpayer and a state that allows the state to impose
tax obligations.
Marginal Tax Rate - Answers The tax rate paid on the last dollar of income earned.
Internal Revenue Code - Answers The main body of domestic statutory tax law in the United States.
Partnership - Answers A business structure in which two or more individuals manage and operate a
business in accordance with the terms and objectives set out in a Partnership Deed.
Progressive Tax System - Answers A tax system in which the rate of taxation increases as income
increases.
Proportional Tax System - Answers A tax system in which the same percentage of tax is levied from all
taxpayers, regardless of income.
Qualified Business Income - Answers Income from a partnership, S corporation, or sole proprietorship
that is eligible for a possible tax deduction.
Real Property Tax - Answers Tax on real estate, including land and any property attached to the land.
