C239 EXAMINATION QUESTIONS AND VERIFIED
ANSWERS
1. Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil)
fuels can be justified by:
a. Political considerations.
b. Economic and social considerations.
c. Promoting administrative feasibility
d. Encouragement of small business. - b RATIONALE: Although it may be "good politics" to
promote measures that ease the problem of global warming (choice a.), the real justification is economic
(curtail dependence on foreign oil) and social (reduce pollution)—choice b. The encouragement of small
business (choice d.) is a by-product of these conservation provisions but is not their justification
2. Taxes not imposed by the Federal government include:
a. Tobacco excise tax.
b. Customs duties (tariffs on imports).
c. Tax on rental cars.
d. Gas guzzler tax. - c RATIONALE: The Federal government imposes an excise tax on tobacco
(choice a.), customs duties (choice b.), and a gas guzzler tax (choice d.). It does not impose a tax on
rental cars (choice c.).
3. Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?
a. Taxpayer compliance is greater for personal use property than for business use property.
b. The tax on automobiles sometimes considers the age of the vehicle.
c. Most states impose a tax on intangibles.
d. The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid -
B RATIONALE: Taxpayer compliance is greater with business use property (choice a.). Very few
states impose a tax on intangibles (choice c.) because it is easily avoided and does not generate much
revenue (choice d.).
4. Which of the following taxes is paid only by the employer?
a. FICA
b. FUTA
c. Social Security tax
d. Medicare tax - b RATIONALE: The other listed taxes are paid by both employer and employee.
ANSWERS
1. Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil)
fuels can be justified by:
a. Political considerations.
b. Economic and social considerations.
c. Promoting administrative feasibility
d. Encouragement of small business. - b RATIONALE: Although it may be "good politics" to
promote measures that ease the problem of global warming (choice a.), the real justification is economic
(curtail dependence on foreign oil) and social (reduce pollution)—choice b. The encouragement of small
business (choice d.) is a by-product of these conservation provisions but is not their justification
2. Taxes not imposed by the Federal government include:
a. Tobacco excise tax.
b. Customs duties (tariffs on imports).
c. Tax on rental cars.
d. Gas guzzler tax. - c RATIONALE: The Federal government imposes an excise tax on tobacco
(choice a.), customs duties (choice b.), and a gas guzzler tax (choice d.). It does not impose a tax on
rental cars (choice c.).
3. Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?
a. Taxpayer compliance is greater for personal use property than for business use property.
b. The tax on automobiles sometimes considers the age of the vehicle.
c. Most states impose a tax on intangibles.
d. The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid -
B RATIONALE: Taxpayer compliance is greater with business use property (choice a.). Very few
states impose a tax on intangibles (choice c.) because it is easily avoided and does not generate much
revenue (choice d.).
4. Which of the following taxes is paid only by the employer?
a. FICA
b. FUTA
c. Social Security tax
d. Medicare tax - b RATIONALE: The other listed taxes are paid by both employer and employee.
