Tax Research Test 2 - Homework Questions and Answers
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1. Discuss the ef- The Supreme Court held that the income tax was unconstitutional, because it was
fect of Pollock a constitutionally prohibited direct tax. Supporters of the income tax proposed
v. Farmers' Loan an amendment to the Constitution in order to dispense with the question of
& Trust Co. on the constitutionality of the income tax. As a result, the 16th amendment to the
the development Constitution was ratified.
of U.S. income tax
laws.
2. The 16th Amend- The 16th Amendment was ratified on February 3, 1913 and eliminated the claim
ment to the Con- that the Federal income tax was unconstitutional. Evidence of this face can be found
stitution had a in the terminology of the amendment:
significant effect
on the U.S. in- "The Congress shall have the power to lay and collect taxes on incomes, from
come tax. What whatever sources derived, without apportionment among the several States, and
was it? without regard to any census or enumeration."
3. Tax protestors Under Code Section 6702, the maximum penalty a taxpayer is subject to is a $5,000
who file "friv- fine for filing a frivolous tax return as a form of protest against the IRS. This fine
olous" tax re- would be levied if the taxpayer files a blank tax return accompanied by a note
turns or bring suggesting that the Federal income tax is unconstitutional.
"frivolous" pro-
ceedings before Internal Revenue Code (IRC) Section 6673 levies a penalty, not to exceed $25,000
the U.S. Tax if a taxpayer brings a frivolous matter before the Tax Court. This fine might be
Court are subject applied when the proceedings are found to have been instituted primarily to delay
to certain fines the revenue collection process and where the taxpayer's grounds for bringing the
or other penal- proceedings are found to be frivolous or groundless.
ties. What are
the grounds for
imposing each
penalty? What
is the maximum
, Tax Research Test 2 - Homework Questions and Answers
Study online at https://quizlet.com/_e0sawp
amount of each
penalty?
4. Discuss the pow- The Constitution is the source for all of the federal tax laws of the country. The
ers of taxation Constitution expressly provides that Congress may not impose export taxes but
that are granted may impose import taxes. In addition, the constitutional rights of due process and
to Congress by privacy of the citizen apply in tax as well as nontax, environments.
the U.S. Constitu-
tion. Are any lim- The Constitution also requires that taxes imposed by Congress be uniform from
its placed on the state to state. Direct and per capita taxes are prohibited unless the revenues
powers of Con- generated are apportioned to the population of the states from which they were
gress to impose collected.
tax?
5. What is a tax Tax treaties are agreements negotiated between countries concerning the treat-
treaty? Explain ment of individuals and companies subject to the tax laws of multiple countries.
the purpose of a The primary purpose of these treaties is to eliminate the "double taxation" that the
tax treaty. What taxpayer would face if their income were subject to tax in more than one country.
matters generally Any tax matter may be covered in a tax treaty. Estate and gift taxation, withholding,
are covered in a and multinational corporate taxation problems can be addressed in a tax treaty.
tax treaty?
6. Briefly summa- Tax legislation generally begins in the Ways and Means Committee of the House
rize the usually of Representatives. The approved bill is then voted on by the full House of Repre-
steps of the leg- sentatives. The bill is the sent to the Senate Finance Committee, and after the bill
islative process is approved by the Finance Committee, it is voted on by the full Senate. The Joint
for the develop- Conference Committee resolves differences in the House and Senate versions of
ment of federal the tax bill, after which the revised bill must be approved by both the House and
tax legislation. the Senate. The approved bill is the signed into law by the president and then
incorporated into the IRS, assuming the president does not choose to veto the bill.
7. As a bill pro- Committee reports usually are available for the deliberation of the Ways and Means
ceeds through Committee, the Finance Committee, and the Joint Conference Committee
, Tax Research Test 2 - Homework Questions and Answers
Study online at https://quizlet.com/_e0sawp
Congress, vari-
ous committee
reports are gen-
erated. List the
three committee
reports that typ-
ically are pre-
pared for a new
tax law.
8. What is a pub- Committee reports are referred to by public law number and every bill that is
lic law number? passed by Congress is assigned such a number.
In P.L. 100-203,
what do the "100" In P.L. 100-123, the prefix refers to the 100th session of Congress that passed the
and the "203" in- law. The suffix indicates this is the 203rd bill that this session of Congress adopted.
dicate?
9. Discuss the evo- After the 16th Amendment was ratified in 1913, Congress passed a series of
lution of today's revenue acts, each of which formed the entire income tax law of the United States.
IRC During the next two decades, Congress passed an additional revenue act every
year or two. During the 1930s, this series of revenue acts and the task of rewriting
frequently the entire tax statute had become unmanageable. Consequently, Con-
gress replaced the revenue acts with the IRS of 1939.
One major problem with the IRC of 1939 was the numbering system that was used.
Specifically, the 1939 codification's numbering system did not leave adequate
room for subsequent changes to the law. Therefore, the 1939 Code was replaced
with a reorganized, more flexible codification in 1954. Due to extensive revisions
to the code made as a part of the Tax Reform Act of 1986, the statute was renamed
the IRC of 1986, which, as amended, constitutes the current tax law of the United
States.
10.
Study online at https://quizlet.com/_e0sawp
1. Discuss the ef- The Supreme Court held that the income tax was unconstitutional, because it was
fect of Pollock a constitutionally prohibited direct tax. Supporters of the income tax proposed
v. Farmers' Loan an amendment to the Constitution in order to dispense with the question of
& Trust Co. on the constitutionality of the income tax. As a result, the 16th amendment to the
the development Constitution was ratified.
of U.S. income tax
laws.
2. The 16th Amend- The 16th Amendment was ratified on February 3, 1913 and eliminated the claim
ment to the Con- that the Federal income tax was unconstitutional. Evidence of this face can be found
stitution had a in the terminology of the amendment:
significant effect
on the U.S. in- "The Congress shall have the power to lay and collect taxes on incomes, from
come tax. What whatever sources derived, without apportionment among the several States, and
was it? without regard to any census or enumeration."
3. Tax protestors Under Code Section 6702, the maximum penalty a taxpayer is subject to is a $5,000
who file "friv- fine for filing a frivolous tax return as a form of protest against the IRS. This fine
olous" tax re- would be levied if the taxpayer files a blank tax return accompanied by a note
turns or bring suggesting that the Federal income tax is unconstitutional.
"frivolous" pro-
ceedings before Internal Revenue Code (IRC) Section 6673 levies a penalty, not to exceed $25,000
the U.S. Tax if a taxpayer brings a frivolous matter before the Tax Court. This fine might be
Court are subject applied when the proceedings are found to have been instituted primarily to delay
to certain fines the revenue collection process and where the taxpayer's grounds for bringing the
or other penal- proceedings are found to be frivolous or groundless.
ties. What are
the grounds for
imposing each
penalty? What
is the maximum
, Tax Research Test 2 - Homework Questions and Answers
Study online at https://quizlet.com/_e0sawp
amount of each
penalty?
4. Discuss the pow- The Constitution is the source for all of the federal tax laws of the country. The
ers of taxation Constitution expressly provides that Congress may not impose export taxes but
that are granted may impose import taxes. In addition, the constitutional rights of due process and
to Congress by privacy of the citizen apply in tax as well as nontax, environments.
the U.S. Constitu-
tion. Are any lim- The Constitution also requires that taxes imposed by Congress be uniform from
its placed on the state to state. Direct and per capita taxes are prohibited unless the revenues
powers of Con- generated are apportioned to the population of the states from which they were
gress to impose collected.
tax?
5. What is a tax Tax treaties are agreements negotiated between countries concerning the treat-
treaty? Explain ment of individuals and companies subject to the tax laws of multiple countries.
the purpose of a The primary purpose of these treaties is to eliminate the "double taxation" that the
tax treaty. What taxpayer would face if their income were subject to tax in more than one country.
matters generally Any tax matter may be covered in a tax treaty. Estate and gift taxation, withholding,
are covered in a and multinational corporate taxation problems can be addressed in a tax treaty.
tax treaty?
6. Briefly summa- Tax legislation generally begins in the Ways and Means Committee of the House
rize the usually of Representatives. The approved bill is then voted on by the full House of Repre-
steps of the leg- sentatives. The bill is the sent to the Senate Finance Committee, and after the bill
islative process is approved by the Finance Committee, it is voted on by the full Senate. The Joint
for the develop- Conference Committee resolves differences in the House and Senate versions of
ment of federal the tax bill, after which the revised bill must be approved by both the House and
tax legislation. the Senate. The approved bill is the signed into law by the president and then
incorporated into the IRS, assuming the president does not choose to veto the bill.
7. As a bill pro- Committee reports usually are available for the deliberation of the Ways and Means
ceeds through Committee, the Finance Committee, and the Joint Conference Committee
, Tax Research Test 2 - Homework Questions and Answers
Study online at https://quizlet.com/_e0sawp
Congress, vari-
ous committee
reports are gen-
erated. List the
three committee
reports that typ-
ically are pre-
pared for a new
tax law.
8. What is a pub- Committee reports are referred to by public law number and every bill that is
lic law number? passed by Congress is assigned such a number.
In P.L. 100-203,
what do the "100" In P.L. 100-123, the prefix refers to the 100th session of Congress that passed the
and the "203" in- law. The suffix indicates this is the 203rd bill that this session of Congress adopted.
dicate?
9. Discuss the evo- After the 16th Amendment was ratified in 1913, Congress passed a series of
lution of today's revenue acts, each of which formed the entire income tax law of the United States.
IRC During the next two decades, Congress passed an additional revenue act every
year or two. During the 1930s, this series of revenue acts and the task of rewriting
frequently the entire tax statute had become unmanageable. Consequently, Con-
gress replaced the revenue acts with the IRS of 1939.
One major problem with the IRC of 1939 was the numbering system that was used.
Specifically, the 1939 codification's numbering system did not leave adequate
room for subsequent changes to the law. Therefore, the 1939 Code was replaced
with a reorganized, more flexible codification in 1954. Due to extensive revisions
to the code made as a part of the Tax Reform Act of 1986, the statute was renamed
the IRC of 1986, which, as amended, constitutes the current tax law of the United
States.
10.
