Federal Income Tax. Exam 1 (chapters 1-
4) Questions & Answers 100% Correct!!
under a ___ tax rate structure, the tax rate increases as the taxpayer's income
increases - ANSWERSprogressive
Under a ___ tax rate structure, the same tax rate applies to all taxpayers -
ANSWERSproportional
under a ___ tax rate structure, the tax rate decreases with income increase -
ANSWERSregressive
Betty, age 67 and single, has a taxable income of 9,100 and SS benefits of 6,200 -
ANSWERSbetty need not file, as her gross income is less than 11,950___ entities, such
as ______ are required to pay income taxes on their taxable income. ___ entities, such
as ______, generally do not directly pay income taxes on their taxable income -
ANSWERStaxpaying; individuals & C-corp.; flow-through; sole proprietorships,
partnership, S-corp, LLC, LLP and certain trusts
LLC's are generally taxed as ___. Therefore, the LLC ___ subject to income tax on its
taxable income but such income __ allocated to the members of the LLC. -
ANSWERSpartnerships; is not; is
If a taxpayer files his tax return and receives a tax refund from the IRS, does this mean
that the IRS feels that the return is correct and will not be subject to a future adult? -
ANSWERSno, it only means the taxpayer has filed a return and received a refund, the
IRS may still audit a taxpayer
What is the statute of limitations for transactions involving fraud? - ANSWERSopen
indefinitely
What is the statute of limitations for transactions including the disallowance of tax
deduction items? - ANSWERSwishing 3 years from the later of the date the tax return
was filed or its due date
What phrase is found in both the 16th amendment and Sec. 61 and why does it appear
in both? - ANSWERSThe phrase "income from whatever source derived". This
overlapping terminology was adopted to assure the constitutionally of the income tax
T/F? Alimony received is taxable to the recipient while child support payments are not -
ANSWERSTRUE
4) Questions & Answers 100% Correct!!
under a ___ tax rate structure, the tax rate increases as the taxpayer's income
increases - ANSWERSprogressive
Under a ___ tax rate structure, the same tax rate applies to all taxpayers -
ANSWERSproportional
under a ___ tax rate structure, the tax rate decreases with income increase -
ANSWERSregressive
Betty, age 67 and single, has a taxable income of 9,100 and SS benefits of 6,200 -
ANSWERSbetty need not file, as her gross income is less than 11,950___ entities, such
as ______ are required to pay income taxes on their taxable income. ___ entities, such
as ______, generally do not directly pay income taxes on their taxable income -
ANSWERStaxpaying; individuals & C-corp.; flow-through; sole proprietorships,
partnership, S-corp, LLC, LLP and certain trusts
LLC's are generally taxed as ___. Therefore, the LLC ___ subject to income tax on its
taxable income but such income __ allocated to the members of the LLC. -
ANSWERSpartnerships; is not; is
If a taxpayer files his tax return and receives a tax refund from the IRS, does this mean
that the IRS feels that the return is correct and will not be subject to a future adult? -
ANSWERSno, it only means the taxpayer has filed a return and received a refund, the
IRS may still audit a taxpayer
What is the statute of limitations for transactions involving fraud? - ANSWERSopen
indefinitely
What is the statute of limitations for transactions including the disallowance of tax
deduction items? - ANSWERSwishing 3 years from the later of the date the tax return
was filed or its due date
What phrase is found in both the 16th amendment and Sec. 61 and why does it appear
in both? - ANSWERSThe phrase "income from whatever source derived". This
overlapping terminology was adopted to assure the constitutionally of the income tax
T/F? Alimony received is taxable to the recipient while child support payments are not -
ANSWERSTRUE
