Test Bank for South-Western Federal Taxation 2026: Corporations, Partnerships, Estates and Trusts, 49th Edition by Nellen, Young

Chap 01 2026 - Nellen
Indicate whether the statement is true or false.

___ 1. Appeals from the U.S. Court of Federal Claims go to the U.S. Supreme Court.
a. True
b. False
ANSWER: False

___ 2. The Golsen rule no longer applies to the U.S. Tax Court.
a. True
b. False
ANSWER: False

___ 3. The Federal income tax law allows a taxpayer to claim a deduction for state and local
income taxes but limits all state taxes to a maximum of $10,000 (which could possibly
sunset at the end of 2025).
a. True
b. False
ANSWER: True

___ 4. Indexation of various income tax components was eliminated by the Tax Cuts and Jobs
Act of 2017.
a. True
b. False
ANSWER: False

___ 5. Determination letters usually involve proposed transactions.
a. True
b. False
ANSWER: False

___ 6. Revenue-neutral tax laws reduce deficits.
a. True
b. False
ANSWER: False

___ 7. When there is a direct conflict between an Internal Revenue Code section and a treaty
provision, the most recent item takes precedence.
Page 1
a. True
b. False
ANSWER: True

,Name: Class: Date:

Chap 01 2026 - Nellen
___ 8. In a U.S. District Court, a jury can decide both questions of fact and questions of law.
a. True
b. False
ANSWER: False

___ 9. Internal Revenue Code Section 318, which deals with the definition of related parties with
respect to stock redemptions, includes brothers and sisters in the related-party definition.
a. True
b. False
ANSWER: False

___ 10. The favorable treatment of research and development expenses (via amortization
deductions and tax credits) is one means of controlling the economy.
a. True
b. False
ANSWER: False

___ 11. The taxation part of the CPA exam (REG) includes both multiple-choice questions and
task-based simulations.
a. True
b. False
ANSWER: True

___ 12. Revenue Rulings carry the same legal force and effect as Regulations.
a. True
b. False
ANSWER: False

___ 13. Longer class lives for depreciable property and the required use of the straight-line
method of depreciation would likely dampen the tax incentive for purchasing capital
assets.
a. True
b. False
ANSWER: True

___ 14. When there is a direct conflict between a tax treaty and the Internal Revenue Code, the
Internal Revenue Code takes precedence.
a. True Page 2
b. False

,ANSWER: False

, Name: Class: Date:

Chap 01 2026 - Nellen
___ 15. The like-kind tax free exchange treatment is an example of the wherewithal to pay
concept.
a. True
b. False
ANSWER: True

___ 16. Letter rulings are issued by the National Office of the IRS.
a. True
b. False
ANSWER: True

___ 17. The encouragement of private-sector pension plans can be justified under the
encouragement of certain industries.
a. True
b. False
ANSWER: False

___ 18. Although a corporation is subject to a Federal income tax, a partnership is not.
a. True
b. False
ANSWER: True

___ 19. Taxpayers may read Committee Reports to determine the intent of Congress.
a. True
b. False
ANSWER: True

___ 20. The U.S. national debt is around $20 trillion.
a. True
b. False
ANSWER: False

___ 21. One Internal Revenue Code section enables shareholders in a small business corporation
to obtain an ordinary deduction for any loss recognized on a stock investment.
a. True
b. False
ANSWER: True