TAX FINAL EXAM QUESTIONS AND ANSWERS

TAX FINAL EXAM QUESTIONS AND ANSWERS which of the following audits is the least common, broadest in scope, and typically most complex? a. correspondence b. targeted c. office d. field e. none of the choices are correct - ANS ️️ Field which of the following is an example of a progressive tax system? a. social security tax b. a sales tax c. a proportional tax d. U. S federal income tax - ANS ️️ U. S federal income tax Deb has found it very difficult to repay her loans. b/c of these difficulties, the bank decided to forgive one of her most recent loans, an amount of $68,000 . After the loan was discharged, Deb had total assets of $266,000 and her remaining loans total $247,000. What amount must Deb include in her gross income? a. 19,000 b. 68,000 c. 49,000 d. 32,000 e. zero- Deb was not solvent when the loan was discharged. - ANS ️️ 266,000 - 247,000 = 19,000 Curtis invests $275,000 in a city Athens bond that pays 4.75% interest. Alternatively, Curtis could have invested the $275,000 in a bond recently issued by Initech, Inc. that pays 6.50% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24%. How much implicit tax would Curtis pay on the city of Athens bond? a. $13,062.50 b. $735.00 c. $635.00 d. $4812.50 e. none of the choices are correct - ANS ️️ 275000 * 4.75% = 13062.50 275000 * 6.50% = 17875 .50 = 4812.50 Which of the following is not one of the basic tax rate structures? a. proportional b. equitable c. regressive d. progressive e. all of these are different kinds of the basic tax rate structure - ANS ️️ equitable employers often withhold federal income taxes directly from worker's paychecks. This is an example of which principle in practice? a. convenience b. certainty c. economy d. equity e. none of the choices are correct - ANS ️️ convenience the city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of _____. a. sin tax to discourage undesirable behavior b. a government fine c. an earmarked tax d. an excise tax e. none of the choices are correct - ANS ️️ an earmarked tax If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without pen