Fundamentals of Taxation 2023 Edition 16th.pdf

Fundamentals of Taxation 2023 Edition TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) The U.S. individual income tax system is an example of a progressive tax rate structure. ⊚ true ⊚ false 2) A proportional tax rate structure is a tax where the tax rate remains at the same rate regardless of the tax base. ⊚ true ⊚ false 3) Under a flat tax, the marginal tax rate and the average tax rate are different. ⊚ true ⊚ false 4) State and local taxes levied on either property or sales are examples of progressive taxes. ⊚ true ⊚ false 5) With a regressive tax, the tax rate increases as the tax base gets larger. ⊚ true ⊚ false 6) The marginal tax rate is the total tax liability divided by the taxable income. ⊚ true ⊚ false 7) The average tax rate is the total tax liability divided by the taxable income. ⊚ true ⊚ false 8) All individual income tax returns follow the basic structure of the simplified tax formula. ⊚ true ⊚ false 9) With a progressive rate structure, the average tax rate is always smaller than the marginal tax rate. ⊚ true ⊚ false 10) At high levels of taxable income, the average tax rate and the marginal tax rate will always be the same. ⊚ true ⊚ false 11) Wages, salaries, and tips are compensation for services rendered. However, commissions, bonuses, and severance pay are not taxable. ⊚ true ⊚ false 12) Federal unemployment compensation benefits are not taxable. ⊚ true ⊚ false 13) A single taxpayer cannot file a Form 1040 if she is age 65 or older. ⊚ true ⊚ false 14) One of the criteria to file a Form 1040 is that the total taxable income of the taxpayer cannot exceed $100,000. ⊚ true ⊚ false 15) Employers report wage income to employees on a Form W-3. ⊚ true ⊚ false Answer Key Test name: chapter 1 1) TRUE 2) TRUE 3) FALSE 4) FALSE 5) FALSE 6) FALSE The marginal tax rate represents the proportion of tax that is paid on the next dollar of taxable income. 7) TRUE 8) TRUE 9) FALSE If the tax rate structure is progressive, the average tax rate is either smaller than or is equal to the marginal tax rate. Since the two can be equal, the average is not always smaller. 10) FALSE 11) FALSE 12) FALSE 13) FALSE 14) FALSE