Page 1 of 70
SOUTH-WESTERN FEDERAL TAXATION 2026: COMPREHENSIVE (49TH
EDITION) — YOUNG, PERSELLIN, NELLEN, CUCCIA, MALONEY, LASSAR &
CRIPE EXAM QUESTIONS AND CORRECT ANSWERS LATEST EDITION 2026
South-Western Federal Taxation 2026: Comprehensive (49th Edition) — Young, Persellin,
Nellen, Cuccia, Maloney, Lassar & Cripe
Original Practice Questions — South-Western Federal Taxation Comprehensive (49th Edition)
Part 1: Introduction and Basic Tax Model (Questions 1–25)
Chapter 1: An Introduction to Taxation (Questions 1–10)
1. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to
validate the Federal income tax on corporations.
A) True
B) False
Answer: B — False
Rationale: The Sixteenth Amendment validated only the tax on individuals. The income tax on
corporations had been previously sanctioned by the courts .
2. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid
Federal income tax on individuals.
A) True
B) False
Answer: B — False
Rationale: There was a valid Federal income tax on individuals during the Civil War period.
However, it was ruled unconstitutional until the Sixteenth Amendment was ratified .
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3. The Federal estate and gift taxes are examples of progressive taxes.
A) True
B) False
Answer: A — True
Rationale: Estate and gift taxes use graduated rates that increase with the value of the taxable
estate or taxable gifts, making them progressive in nature .
4. The Federal excise tax on cigarettes is an example of a proportional tax.
A) True
B) False
Answer: A — True
Rationale: The tax is a flat $1.01 per pack. Regardless of income, all cigarette purchasers pay the
same tax per pack .
5. Which of the following is a constitutional limitation on the power of taxation?
A) Tax must be for a public purpose
B) No appropriation of public money for religious purposes
C) Exemption of government agencies from taxation
D) Power to tax cannot be delegated to private persons
Answer: B — No appropriation of public money for religious purposes
Rationale: This is an express constitutional limitation. The other options are inherent limitations,
not constitutional ones .
6. Which is a correct statement regarding taxation power?
A) The President is authorized to increase or decrease national internal revenue tax rates
B) Every sovereign government has the inherent power to tax
C) Income tax is an indirect tax
D) One of the nature of taxation is the reciprocal duties of protection and support
Answer: B — Every sovereign government has the inherent power to tax
Rationale: The power to tax is an inherent attribute of sovereignty. It exists independent of any
constitutional grant and is essential for government survival .
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7. In every case of doubt, tax statutes are construed:
A) Strictly against the government and the taxpayer
B) Liberally in favor of the government and the taxpayer
C) Strictly against the government and liberally in favor of the taxpayer
D) Liberally in favor of the government and strictly against the taxpayer
Answer: C — Strictly against the government and liberally in favor of the taxpayer
Rationale: Tax laws are construed strictly against the government and liberally in favor of the
taxpayer when doubt exists. However, tax exemptions are construed strictly against the
taxpayer .
8. A tax must be imposed for a public purpose. Which of the following is NOT a public
purpose?
A) National defense
B) Public education
C) Improvement of the sugar and coconut industries
D) Improvement of a subdivision road
Answer: D — Improvement of a subdivision road
Rationale: A subdivision road serves a private rather than public purpose, as it benefits specific
property owners rather than the general public .
9. Which of the following is the primary source of federal tax law in the United States?
A) Treasury Regulations
B) Internal Revenue Code (IRC)
C) IRS Revenue Rulings
D) Tax Court decisions
Answer: B — Internal Revenue Code (IRC)
Rationale: The Internal Revenue Code (IRC) is the primary statutory source of federal tax law,
enacted by Congress. Treasury Regulations interpret the IRC but have secondary authority .
10. The ability-to-pay concept in taxation suggests that:
A) All taxpayers pay the same dollar amount
B) Taxpayers with higher incomes should pay more taxes
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C) Only wealthy individuals are taxed
D) Taxes should be based solely on consumption
Answer: B — Taxpayers with higher incomes should pay more taxes
Rationale: The ability-to-pay principle holds that the tax burden should be distributed according
to taxpayers' capacity to bear it—those with higher incomes pay more .
Chapter 2: Working with the Tax Law (Questions 11–15)
11. Which of the following is a secondary source of tax law?
A) Internal Revenue Code
B) Treasury Regulations
C) Tax treaties
D) Legislative regulations
Answer: B — Treasury Regulations
Rationale: Treasury Regulations interpret the IRC but have secondary authority. The IRC is the
primary statutory source .
12. A revenue ruling is:
A) A law passed by Congress
B) An official interpretation of tax law by the IRS
C) A court decision
D) A treaty with a foreign government
Answer: B — An official interpretation of tax law by the IRS
Rationale: Revenue Rulings represent the IRS's official interpretation of tax law but are not
statutory authority .
13. Which court is the trial court for federal tax cases?
A) U.S. Supreme Court
B) U.S. Court of Appeals
C) U.S. Tax Court
D) U.S. District Court
Answer: C — U.S. Tax Court
Rationale: The U.S. Tax Court is a trial court that hears federal tax cases. Taxpayers can also file
in U.S. District Court or U.S. Court of Federal Claims.
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SOUTH-WESTERN FEDERAL TAXATION 2026: COMPREHENSIVE (49TH
EDITION) — YOUNG, PERSELLIN, NELLEN, CUCCIA, MALONEY, LASSAR &
CRIPE EXAM QUESTIONS AND CORRECT ANSWERS LATEST EDITION 2026
South-Western Federal Taxation 2026: Comprehensive (49th Edition) — Young, Persellin,
Nellen, Cuccia, Maloney, Lassar & Cripe
Original Practice Questions — South-Western Federal Taxation Comprehensive (49th Edition)
Part 1: Introduction and Basic Tax Model (Questions 1–25)
Chapter 1: An Introduction to Taxation (Questions 1–10)
1. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to
validate the Federal income tax on corporations.
A) True
B) False
Answer: B — False
Rationale: The Sixteenth Amendment validated only the tax on individuals. The income tax on
corporations had been previously sanctioned by the courts .
2. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid
Federal income tax on individuals.
A) True
B) False
Answer: B — False
Rationale: There was a valid Federal income tax on individuals during the Civil War period.
However, it was ruled unconstitutional until the Sixteenth Amendment was ratified .
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,Page 2 of 70
3. The Federal estate and gift taxes are examples of progressive taxes.
A) True
B) False
Answer: A — True
Rationale: Estate and gift taxes use graduated rates that increase with the value of the taxable
estate or taxable gifts, making them progressive in nature .
4. The Federal excise tax on cigarettes is an example of a proportional tax.
A) True
B) False
Answer: A — True
Rationale: The tax is a flat $1.01 per pack. Regardless of income, all cigarette purchasers pay the
same tax per pack .
5. Which of the following is a constitutional limitation on the power of taxation?
A) Tax must be for a public purpose
B) No appropriation of public money for religious purposes
C) Exemption of government agencies from taxation
D) Power to tax cannot be delegated to private persons
Answer: B — No appropriation of public money for religious purposes
Rationale: This is an express constitutional limitation. The other options are inherent limitations,
not constitutional ones .
6. Which is a correct statement regarding taxation power?
A) The President is authorized to increase or decrease national internal revenue tax rates
B) Every sovereign government has the inherent power to tax
C) Income tax is an indirect tax
D) One of the nature of taxation is the reciprocal duties of protection and support
Answer: B — Every sovereign government has the inherent power to tax
Rationale: The power to tax is an inherent attribute of sovereignty. It exists independent of any
constitutional grant and is essential for government survival .
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,Page 3 of 70
7. In every case of doubt, tax statutes are construed:
A) Strictly against the government and the taxpayer
B) Liberally in favor of the government and the taxpayer
C) Strictly against the government and liberally in favor of the taxpayer
D) Liberally in favor of the government and strictly against the taxpayer
Answer: C — Strictly against the government and liberally in favor of the taxpayer
Rationale: Tax laws are construed strictly against the government and liberally in favor of the
taxpayer when doubt exists. However, tax exemptions are construed strictly against the
taxpayer .
8. A tax must be imposed for a public purpose. Which of the following is NOT a public
purpose?
A) National defense
B) Public education
C) Improvement of the sugar and coconut industries
D) Improvement of a subdivision road
Answer: D — Improvement of a subdivision road
Rationale: A subdivision road serves a private rather than public purpose, as it benefits specific
property owners rather than the general public .
9. Which of the following is the primary source of federal tax law in the United States?
A) Treasury Regulations
B) Internal Revenue Code (IRC)
C) IRS Revenue Rulings
D) Tax Court decisions
Answer: B — Internal Revenue Code (IRC)
Rationale: The Internal Revenue Code (IRC) is the primary statutory source of federal tax law,
enacted by Congress. Treasury Regulations interpret the IRC but have secondary authority .
10. The ability-to-pay concept in taxation suggests that:
A) All taxpayers pay the same dollar amount
B) Taxpayers with higher incomes should pay more taxes
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C) Only wealthy individuals are taxed
D) Taxes should be based solely on consumption
Answer: B — Taxpayers with higher incomes should pay more taxes
Rationale: The ability-to-pay principle holds that the tax burden should be distributed according
to taxpayers' capacity to bear it—those with higher incomes pay more .
Chapter 2: Working with the Tax Law (Questions 11–15)
11. Which of the following is a secondary source of tax law?
A) Internal Revenue Code
B) Treasury Regulations
C) Tax treaties
D) Legislative regulations
Answer: B — Treasury Regulations
Rationale: Treasury Regulations interpret the IRC but have secondary authority. The IRC is the
primary statutory source .
12. A revenue ruling is:
A) A law passed by Congress
B) An official interpretation of tax law by the IRS
C) A court decision
D) A treaty with a foreign government
Answer: B — An official interpretation of tax law by the IRS
Rationale: Revenue Rulings represent the IRS's official interpretation of tax law but are not
statutory authority .
13. Which court is the trial court for federal tax cases?
A) U.S. Supreme Court
B) U.S. Court of Appeals
C) U.S. Tax Court
D) U.S. District Court
Answer: C — U.S. Tax Court
Rationale: The U.S. Tax Court is a trial court that hears federal tax cases. Taxpayers can also file
in U.S. District Court or U.S. Court of Federal Claims.
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