McGraw-Hill's Taxation of Individuals and Business Entities 2023 Edition 14th Edition by Brian Spilker Benjamin Ayers John Barrick Troy Lewis John Robinson

McGraw-Hill's Taxation of Individuals and Business Entities 2023 Edition 14th Edition by Brian Spilker Benjamin Ayers John Barrick Troy Lewis John Robinson Version 1 2 TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false. 1) Taxes influence many types of business decisions but generally do not influence personal decisions. ⊚ true ⊚ false 2) Taxes influence business decisions such as where a business should locate or how a business should be structured. ⊚ true ⊚ false 3) Tax policy rarely plays an important part in presidential campaigns. ⊚ true ⊚ false 4) Margaret recently received a parking ticket. This is a common example of a local tax. ⊚ true ⊚ false Version 1 3 5) George recently paid $50 to renew his driver's license. The $50 payment is considered a tax. ⊚ true ⊚ false 6) A 1 percent charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools. ⊚ true ⊚ false 7) One key characteristic of a tax is that it is a required payment to a governmental agency. ⊚ true ⊚ false 8) Common examples of sin taxes include the taxes imposed on airline tickets and gasoline. ⊚ true ⊚ false Version 1 4 9) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the products being taxed. ⊚ true ⊚ false 10) In addition to raising revenues, specific U.S. taxes may have other objectives (e.g., economic or social objectives). ⊚ true ⊚ false 11) The two components of the tax calculation are the tax rate and the taxpayer's status. ⊚ true ⊚ false 12) The tax base for the federal income tax is taxable income. ⊚ true ⊚ false Version 1 5 13) A flat tax is an example of a graduated tax system. ⊚ true ⊚ false 14) The main difficulty in calculating an income tax is determining the correct amount of the tax base. ⊚ true ⊚ false 15) A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning. ⊚ true ⊚ false 16) The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate. ⊚ true ⊚ false Version 1 6 17) The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income. ⊚ true ⊚ false 18) In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate. ⊚ true ⊚ false 19) In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate. ⊚ true ⊚ false 20) A sales tax is a common example of a progressive tax rate structure. ⊚ true ⊚ false Version 1 7 21) In terms of effective tax rates, the sales tax can be viewed as a regressive tax. ⊚ true ⊚ false 22) While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax. ⊚ true ⊚ false 23) The largest federal tax, in terms of revenue collected, is the Social Security tax. ⊚ true ⊚ false 24) The 9th Amendment to the U.S. Constitution removed all doubt that a federal income tax was allowed under the U.S. Constitution. ⊚ true ⊚ false Version 1 8 25) A common example of an employment-related tax is the Medicare tax. ⊚ true ⊚ false 26) Self-employment taxes are charged on self-employment income in addition to any federal income tax. ⊚ true ⊚ false 27) Excise taxes are typically levied on the value of a good purchased. ⊚ true ⊚ false 28) The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life. ⊚ true ⊚ false Version 1 9 29) A use tax is typically imposed by a state on goods purchased within the state. ⊚ true ⊚ false 30) Property taxes may be imposed on both real and personal property. ⊚ true ⊚ false 31) Relative to explicit taxes, implicit taxes are much easier to estimate. ⊚ true ⊚ false 32) Implicit taxes are indirect taxes on tax-favored assets. ⊚ true ⊚ false Version 1 10 33) Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues. ⊚ true ⊚ false 34) The income and substitution effects are two opposing effects that one could consider in static forecasting. ⊚ true ⊚ false 35) Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations. ⊚ true ⊚ false 36) Regressive tax rate structures are typically considered to be vertically equitable. ⊚ true ⊚ false Version 1 11 37) Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems. ⊚ true ⊚ false 38) One must consider the "economy" criterion in evaluating tax systems from both the taxpayer's and the government's perspective. ⊚ true ⊚ false MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 39) Taxes influence which of the following decisions? A) Business decisions B) Personal decisions C) Political decisions D) Investment decisions E) All of the choices are correct. Version 1 12 40) Margaret was issued a $150 speeding ticket. This is: A) a tax because payment is required by law. B) a tax because the payment is not related to any specific benefit received from the government agency collecting the ticket. C) not a tax because it is considered a fine intended to punish illegal behavior. D) a tax because it is imposed by a government agency. E) not a tax because Margaret could have avoided payment if she did not speed. 41) Which of the following is a tax? 1.A 1 percent special sales tax for funding local road construction. 2.A fee paid to the state for a license to practice as an attorney. 3.An income tax imposed by Philadelphia on persons working within the city limits. 4.A special property assessment for installing a new water system in the taxpayer's neighborhood. A) Only I is correct. B) Only IV is correct. C) Only III is correct. D) III and IV are correct. E) I and III are correct. 42) Which of the following is considered a tax? Version 1 13 A) Tolls B) Parking meter fees C) Annual licensing fees D) A local surcharge paid on retail sales to fund public schools E) Entrance fees paid at national parks 43) Earmarked taxes are: A) taxes assessed only on certain taxpayers. B) taxes assessed to fund a specific purpose. C) taxes assessed for only a specific time period. D) taxes assessed to discourage less desirable behavior. E) None of the choices are correct. 44) Sin taxes are: A) taxes assessed by religious organizations. B) taxes assessed on certain illegal acts. C) taxes assessed to discourage less desirable behavior. D) taxes assessed to fund a specific purpose. E) None of the choices are correct. 45) To calculate a tax, you need to know: tax base taxing agency tax rate purpose of the tax Version 1 14 A) Only I is correct. B) Only IV is correct. C) Only III is correct. D) Items I through IV are correct. E) I and III are correct. 46) Which of the following is not an example of a graduated tax rate structure? A) Progressive tax rate structure B) Proportional tax rate structure C) U.S. federal income tax D) Regressive tax rate structure E) None of the choices are correct.