Page 1
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,TABLEOFCONTENTS
Chapter1:AnIntroductiontoTaxationandUnderstandingtheFederalTaxLawChapter2: WorkingwiththeTa x gb gb
Law
Chapter03:Tax FormulaandTaxDeterminationChapter 04:GrossInco me
rw gb gb
:ConceptsandInclusionsChapter05:G rossIncome:Exclusions Chapt gb gb
er06:DeductionsandLosses:InGeneral
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter 0 8
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: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09: De duct
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ions:EmployeeandSelf-Employed-
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Related Expense Chapter 10: Deductions and Losses: Certain Itemized De d uc
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tionsChapter11:InvestorLosses Chapter12:AlternativeMinimumTa x Ch gb gb rw
apter13:Tax CreditsandPayment Procedures gb gb
Chapter14:PropertyTransactions:DeterminationofGainorLossand jc gb
Chap ter15:PropertyTransactions:NontaxableExchanges
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Chapter 16: Property Transactions: Capital Gains and Losses Chapter 17: Pr
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operty Transactions: 1231and Recapture Provisions Chapter18
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:AccountingPeriodsandMethods Chapter19:DeferredC ompensation gb gb
Chapter 20:Corporations andPartnerships
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Page 2
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, Chapter01 2025 Individualsgb gb
Answers2at2the2end2of2each2chapter
Indicate whether the statement is2
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1. Salesmade over the internet are not exempt from the application of a general sales (or use) tax.
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a. True
b. False
2. Upon auditby the IRS,Faith is assessed adeficiency of $40,000 of which $25,000 is attributableto negligence.
gb gb gb gb gb gb gb gb gb gb gb gb gb gb gb
The 20% negligence penalty will applyto$25,000.
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a. True
b. False
3.Ultimately,mosttaxes are paid byindividuals. jc jc g b
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxesimposed onrealtymay not remainthe same.
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a. True
b. False
5. The principal objective of the FUTA2tax is to provide some measure of retirement security.
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a. True
b. False
6. If moreIRS auditsare producinga highernumberof no change results, thisindicatesincreased complianceonthe
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pa r t of taxpayers. gb gb gb gb
a. True
b. False
7.A safe andeasyway fora taxpayertoavoidlocaland statesales taxesis to make the purchase in a state thatleviesno s u
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ch taxes. rw
a. True
b. False
8. A2calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpay men
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t of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need not incl
gb gb gb gb gb gb gb gb gb gb gb gb gb rw gb gb gb gb gb gb gb gb gb gb
u d e interest.
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a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make thetax cuttemporary.
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a. True
b. False
Page 3
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, Name: Class: Date: gb
Chapter 01 2025 Individuals
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10. For Federal income tax purposes, there never has beena general amnesty period.
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a. True
b. False
11.Tolessenoreliminatethe effect ofmultipletaxation,a taxpayer who is subject to bothforeign andU.S.incometaxe s on th gb gb gb gb gb gb rw gb gb rw gb gb gb
e same income is allowed either a deduction or a credit for the foreign tax paid.
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a. True
b. False
12.Because it isconsistent with thewherewithalto pay concept,thetax lawrequires aseller to recognizeagain inthe ye ar t
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he installment sale occurs.
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a. True
b. False
13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
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a. True
b. False
14.In2024,José,a widower,sells land (fairmarket value of$100,000)tohis daughter, Linda,for$50,000.Joséhas not2
rw gb rw gb gb rw rw gb
ma deataxablegift. gb
a. True
b. False
15.Foromissions from gross incomeinexcessof25%ofthat reported,thereis no statuteoflimitationson ad diti o
rw gb rw gb gb gb gb rw gb gb gb gb gb
nalincometax assessmentsbythe IRS. rw gb
a. True
b. False
16. Stealth taxeshave theeffect ofgenerating additional taxes fromall taxpayers.
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a. True
b. False
17. Jason’s business warehouse is destroyed byfire.Because theinsurance proceeds exceedthe basis ofthe propert y, a g ai
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n results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of t he wher
g b gb gb gb gb gb gb gb gb gb gb gb gb g b gb gb rw gb gb gb gb gb gb gb g
bew ithal to pay concept.
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a. True
b. False
18. An inheritance taxis a tax2on a decedent’s right to pass property at death.
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a. True
b. False
19.When interest is chargedon adeficiency, anypart of a monthcounts as a fullmonth.
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Page 4 jcg b
jcg b
,TABLEOFCONTENTS
Chapter1:AnIntroductiontoTaxationandUnderstandingtheFederalTaxLawChapter2: WorkingwiththeTa x gb gb
Law
Chapter03:Tax FormulaandTaxDeterminationChapter 04:GrossInco me
rw gb gb
:ConceptsandInclusionsChapter05:G rossIncome:Exclusions Chapt gb gb
er06:DeductionsandLosses:InGeneral
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter 0 8
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: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09: De duct
gb gb gb gb gb gb gb gb gb gb
ions:EmployeeandSelf-Employed-
bg
Related Expense Chapter 10: Deductions and Losses: Certain Itemized De d uc
gb gb gb gb gb gb gb gb gb gb gb
tionsChapter11:InvestorLosses Chapter12:AlternativeMinimumTa x Ch gb gb rw
apter13:Tax CreditsandPayment Procedures gb gb
Chapter14:PropertyTransactions:DeterminationofGainorLossand jc gb
Chap ter15:PropertyTransactions:NontaxableExchanges
g b bg bg bg bg bg
Chapter 16: Property Transactions: Capital Gains and Losses Chapter 17: Pr
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operty Transactions: 1231and Recapture Provisions Chapter18
gb gb gb gb gb
:AccountingPeriodsandMethods Chapter19:DeferredC ompensation gb gb
Chapter 20:Corporations andPartnerships
gb rw
Page 2
jcg b
, Chapter01 2025 Individualsgb gb
Answers2at2the2end2of2each2chapter
Indicate whether the statement is2
gb gb gb gb g b g b true or false. gb gb
1. Salesmade over the internet are not exempt from the application of a general sales (or use) tax.
gb gb gb gb gb rw gb rw gb gb gb gb gb gb rw gb gb gb
a. True
b. False
2. Upon auditby the IRS,Faith is assessed adeficiency of $40,000 of which $25,000 is attributableto negligence.
gb gb gb gb gb gb gb gb gb gb gb gb gb gb gb
The 20% negligence penalty will applyto$25,000.
gb gb gb gb gb
a. True
b. False
3.Ultimately,mosttaxes are paid byindividuals. jc jc g b
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxesimposed onrealtymay not remainthe same.
gb gb gb gb jc gb gb gb gb gb gb g b gb gb rw gb jc gb
a. True
b. False
5. The principal objective of the FUTA2tax is to provide some measure of retirement security.
gb gb gb gb gb gb g b jc gb gb gb gb gb jc
a. True
b. False
6. If moreIRS auditsare producinga highernumberof no change results, thisindicatesincreased complianceonthe
gb gb jc rw gb gb gb gb gb gb
pa r t of taxpayers. gb gb gb gb
a. True
b. False
7.A safe andeasyway fora taxpayertoavoidlocaland statesales taxesis to make the purchase in a state thatleviesno s u
gb gb gb bg gb gb gb gb bg bg gb gb rw gb rw gb gb gb gb gb bg gb gb gb
ch taxes. rw
a. True
b. False
8. A2calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpay men
gb gb gb gb gb gb gb gb rw gb gb gb gb gb gb gb gb gb gb
t of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need not incl
gb gb gb gb gb gb gb gb gb gb gb gb gb rw gb gb gb gb gb gb gb gb gb gb
u d e interest.
gb gb gb
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make thetax cuttemporary.
gb rw gb gb gb gb gb rw rw g b gb gb gb gb rw gb
a. True
b. False
Page 3
jcg b
, Name: Class: Date: gb
Chapter 01 2025 Individuals
gb gb gb
10. For Federal income tax purposes, there never has beena general amnesty period.
gb gb gb rw rw gb gb gb gb gb gb gb
a. True
b. False
11.Tolessenoreliminatethe effect ofmultipletaxation,a taxpayer who is subject to bothforeign andU.S.incometaxe s on th gb gb gb gb gb gb rw gb gb rw gb gb gb
e same income is allowed either a deduction or a credit for the foreign tax paid.
gb gb gb rw gb gb gb gb gb gb gb gb gb gb jc
a. True
b. False
12.Because it isconsistent with thewherewithalto pay concept,thetax lawrequires aseller to recognizeagain inthe ye ar t
gb gb gb rw rw gb gb gb jc gb rw gb rw gb gb
he installment sale occurs.
gb gb rw
a. True
b. False
13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
gb gb gb gb gb g b gb g b gb rw gb g b gb gb gb gb gb
a. True
b. False
14.In2024,José,a widower,sells land (fairmarket value of$100,000)tohis daughter, Linda,for$50,000.Joséhas not2
rw gb rw gb gb rw rw gb
ma deataxablegift. gb
a. True
b. False
15.Foromissions from gross incomeinexcessof25%ofthat reported,thereis no statuteoflimitationson ad diti o
rw gb rw gb gb gb gb rw gb gb gb gb gb
nalincometax assessmentsbythe IRS. rw gb
a. True
b. False
16. Stealth taxeshave theeffect ofgenerating additional taxes fromall taxpayers.
rw rw gb gb gb gb rw rw
a. True
b. False
17. Jason’s business warehouse is destroyed byfire.Because theinsurance proceeds exceedthe basis ofthe propert y, a g ai
gb rw rw gb rw rw rw gb rw gb gb jc gb gb g b
n results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of t he wher
g b gb gb gb gb gb gb gb gb gb gb gb gb g b gb gb rw gb gb gb gb gb gb gb g
bew ithal to pay concept.
gb gb gb gb
a. True
b. False
18. An inheritance taxis a tax2on a decedent’s right to pass property at death.
gb rw gb gb gb gb gb gb jc gb jc gb jc
a. True
b. False
19.When interest is chargedon adeficiency, anypart of a monthcounts as a fullmonth.
gb gb gb gb gb rw gb gb gb gb gb
Page 4 jcg b
