TEST BANK
d
South-Western Federal Taxation 2025:
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Individual Income Taxes, 48th Edition
d d d d
by James Young Complete Chapters 1 - 20
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Page 1
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,TABLEOFCONTENTS
Chapter 1:An Introduction to Taxation andUnderstanding the Federal Tax Law Chapter
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2:Working withtheTaxLaw
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Chapter03:TaxFormulaandTax Determination
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d Chapter04:GrossIncome:Conceptsand Inclusions
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d Chapter05:GrossIncome:Exclusions
d d d d tr
Chapter06:Deductionsand Losses:In General
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Chapter07:DeductionsandLosses:CertainBusiness Expenses
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d Chapter08:Depreciation, CostRecovery,Amortization, and Depletion
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d Chapter 09:Deductions: Employee and Self-Employed-Related Expense
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d Chapter 10:Deductionsand Losses: Certain Itemized Deductions Chapter
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11:InvestorLosses
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Chapter12:AlternativeMinimumTax
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Chapter13:TaxCreditsand PaymentProcedures
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Chapter 14:PropertyTransactions: Determination ofGainorLossand
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d Chapter15:PropertyTransactions: Nontaxable Exchanges
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Chapter 16:PropertyTransactions: Capital Gainsand Losses Chapter
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17:PropertyTransactions: 1231and Recapture Provisions Chapter18:
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AccountingPeriodsandMethods
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Chapter19:DeferredCompensation Chapter
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20:Corporationsand Partnerships
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Page 2
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, Chapter 01 2025 Individuals
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Answers at the end of each chapter
tr tr tr tr tr tr
Indicate whether the statement is true or false.
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d 1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
d d d d d d tr tr d d d d d d tr d d d
a. True
b. False
2. Uponaudit bytheIRS,Faith is assessed adeficiencyof$40,000 ofwhich$25,000isattributabletonegligence.
d tr tr tr tr tr tr
The 20% negligence penaltywillapplyto $25,000.
tr tr tr tr
a. True
b. False
3. Ultimately, most taxesarepaidbyindividuals.
d tr tr tr
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed onrealty maynot remain the same.
d d d d d tr d d tr d tr d d d d tr d d d d tr tr d
a. True
b. False
d 5. The principalobjective oftheFUTA tax is toprovidesomemeasure ofretirementsecurity.
tr tr tr d tr tr tr d d tr
a. True
b. False
6. If more IRS audits are producing a higher number of nochange results, this indicates increased compliance onthe part of
d d d d d tr d d d d d d d d d d d d d tr d
taxpayers.
d
a. True
b. False
7. 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
d d d d d d d d tr d d d tr d d d d tr d d tr d d d d d d d tr tr
nosuch taxes. d
a. True
b. False
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpaymen
d d d d tr d d d d d d d tr d d tr d d d d d d d
t of $6,000,andthe taxpayer requests arefund ofthis amount. The refund is paid on May 16, 2024.Therefund need not include int
d tr d tr d d d d d tr d tr d d d d d tr tr d
erest.
d
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
d d tr tr d d d d d tr d d d d d d d d d tr
a. True
b. False
Page 3 d
, Name: Class: Date: d
Chapter 01 2025 Individuals
d d d
d 10. For Federal income tax purposes, there never has been a general amnesty period.
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a. True d
b. False d
11. To lessenoreliminatethe effect ofmultipletaxation,a taxpayerwhoissubject to both foreignand U.S.income taxes on th
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esameincomeisallowedeitheradeductionoracredit for theforeign taxpaid.
d d d d d d d tr d tr d
a. True
b. False
12. Because it is consistent with the wherewithalto payconcept, the taxlaw requires aseller to recognizea gain inthe year t
d d d tr tr tr d tr d d d d d d tr d tr d d tr d d
heinstallment saleoccurs.
d tr d
a. True
b. False
13. Theamount ofataxpayer’sitemizeddeductions will increase the chance of being audited bythe IRS.
d d d tr d d d d d d d d d d d tr
a. True
b. False
14. In2024,José,a widower, sellsland (fairmarket value of$100,000) to his daughter,Linda,for$50,000.Joséhas not made
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ataxablegift.
d d
a. True
b. False
15.For omissions fromgrossincome inexcess of 25% ofthat reported,there isno statuteoflimitations on addition
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alincome taxassessments bytheIRS.
d d d d d
a. True
b. False
16. Stealth taxes havethe effect ofgeneratingadditional taxes fromall taxpayers.
d d tr tr d d tr d d tr d d
a. True
b. False
d 17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the property,
d d d d d d d d d d tr d d d d d d d d
again results.If Jason shortlyreinvests the proceeds in anewwarehouse,nogainis recognized dueto the application of the wher
d d d d d tr d d tr d tr d d d d
ewithalto payconcept.
d d tr d
a. True
b. False
18. An inheritance tax is a tax on a decedent’s right to pass property at death.
d d d tr d d tr d d d tr tr d d d tr
a. True
b. False
d 19.When interest is charged onadeficiency, anypart of a month counts as afull month.
d d d d d tr d tr d tr d tr
a. True
b. False
Page 4 d
d
South-Western Federal Taxation 2025:
d d d
Individual Income Taxes, 48th Edition
d d d d
by James Young Complete Chapters 1 - 20
d d d d d d d
Page 1
d
,TABLEOFCONTENTS
Chapter 1:An Introduction to Taxation andUnderstanding the Federal Tax Law Chapter
d d d d d d d d d tr d
2:Working withtheTaxLaw
d d d d
Chapter03:TaxFormulaandTax Determination
d d d tr
d Chapter04:GrossIncome:Conceptsand Inclusions
d d d d d tr
d Chapter05:GrossIncome:Exclusions
d d d d tr
Chapter06:Deductionsand Losses:In General
d d d d d
Chapter07:DeductionsandLosses:CertainBusiness Expenses
d d d d d tr tr
d Chapter08:Depreciation, CostRecovery,Amortization, and Depletion
d d d d d d d
d Chapter 09:Deductions: Employee and Self-Employed-Related Expense
d d d d d d
d Chapter 10:Deductionsand Losses: Certain Itemized Deductions Chapter
d d d d d d d
11:InvestorLosses
d d d
Chapter12:AlternativeMinimumTax
d d d d tr
Chapter13:TaxCreditsand PaymentProcedures
d d d d
Chapter 14:PropertyTransactions: Determination ofGainorLossand
d d d d d d
d Chapter15:PropertyTransactions: Nontaxable Exchanges
d d d d d
Chapter 16:PropertyTransactions: Capital Gainsand Losses Chapter
d d d d d d tr d
17:PropertyTransactions: 1231and Recapture Provisions Chapter18:
d d d d d d d d
AccountingPeriodsandMethods
d d d
Chapter19:DeferredCompensation Chapter
d d d d
20:Corporationsand Partnerships
d d d d
Page 2
d
, Chapter 01 2025 Individuals
d d d
Answers at the end of each chapter
tr tr tr tr tr tr
Indicate whether the statement is true or false.
d d d d d d d
d 1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
d d d d d d tr tr d d d d d d tr d d d
a. True
b. False
2. Uponaudit bytheIRS,Faith is assessed adeficiencyof$40,000 ofwhich$25,000isattributabletonegligence.
d tr tr tr tr tr tr
The 20% negligence penaltywillapplyto $25,000.
tr tr tr tr
a. True
b. False
3. Ultimately, most taxesarepaidbyindividuals.
d tr tr tr
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed onrealty maynot remain the same.
d d d d d tr d d tr d tr d d d d tr d d d d tr tr d
a. True
b. False
d 5. The principalobjective oftheFUTA tax is toprovidesomemeasure ofretirementsecurity.
tr tr tr d tr tr tr d d tr
a. True
b. False
6. If more IRS audits are producing a higher number of nochange results, this indicates increased compliance onthe part of
d d d d d tr d d d d d d d d d d d d d tr d
taxpayers.
d
a. True
b. False
7. 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
d d d d d d d d tr d d d tr d d d d tr d d tr d d d d d d d tr tr
nosuch taxes. d
a. True
b. False
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpaymen
d d d d tr d d d d d d d tr d d tr d d d d d d d
t of $6,000,andthe taxpayer requests arefund ofthis amount. The refund is paid on May 16, 2024.Therefund need not include int
d tr d tr d d d d d tr d tr d d d d d tr tr d
erest.
d
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
d d tr tr d d d d d tr d d d d d d d d d tr
a. True
b. False
Page 3 d
, Name: Class: Date: d
Chapter 01 2025 Individuals
d d d
d 10. For Federal income tax purposes, there never has been a general amnesty period.
d d tr d d d d d tr d tr d d
a. True d
b. False d
11. To lessenoreliminatethe effect ofmultipletaxation,a taxpayerwhoissubject to both foreignand U.S.income taxes on th
d tr tr tr tr tr tr tr tr tr tr d d
esameincomeisallowedeitheradeductionoracredit for theforeign taxpaid.
d d d d d d d tr d tr d
a. True
b. False
12. Because it is consistent with the wherewithalto payconcept, the taxlaw requires aseller to recognizea gain inthe year t
d d d tr tr tr d tr d d d d d d tr d tr d d tr d d
heinstallment saleoccurs.
d tr d
a. True
b. False
13. Theamount ofataxpayer’sitemizeddeductions will increase the chance of being audited bythe IRS.
d d d tr d d d d d d d d d d d tr
a. True
b. False
14. In2024,José,a widower, sellsland (fairmarket value of$100,000) to his daughter,Linda,for$50,000.Joséhas not made
d tr tr tr tr tr tr tr tr tr d tr
ataxablegift.
d d
a. True
b. False
15.For omissions fromgrossincome inexcess of 25% ofthat reported,there isno statuteoflimitations on addition
d d tr tr d tr tr tr tr tr tr d
alincome taxassessments bytheIRS.
d d d d d
a. True
b. False
16. Stealth taxes havethe effect ofgeneratingadditional taxes fromall taxpayers.
d d tr tr d d tr d d tr d d
a. True
b. False
d 17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the property,
d d d d d d d d d d tr d d d d d d d d
again results.If Jason shortlyreinvests the proceeds in anewwarehouse,nogainis recognized dueto the application of the wher
d d d d d tr d d tr d tr d d d d
ewithalto payconcept.
d d tr d
a. True
b. False
18. An inheritance tax is a tax on a decedent’s right to pass property at death.
d d d tr d d tr d d d tr tr d d d tr
a. True
b. False
d 19.When interest is charged onadeficiency, anypart of a month counts as afull month.
d d d d d tr d tr d tr d tr
a. True
b. False
Page 4 d
