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,Test Bank for South-Western Federal Taxation 2025: Comprehensive 2025 48e
Young
Chapter 01 2025 - Comprehensive
Answers Included ✅
Indicate whether the statement is true or false.
1. If more IRS audits are producing a higher number of no change results, this indicates increased compliance on
the part of taxpayers.
a. True
b. False
2. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied
tax rates from a low of 1% to a high of 6%.
a. True
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b. False
3. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
4. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
a. True
b. False
5. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
b. False
6. The Federal estate and gift taxes are examples of progressive rate taxes.
a. True
b. False
7. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
a. True
b. False
8. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
9. To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward of excess
charitable contributions of a particular year to other years.
a. True
b. False
10. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
a. True
b. False
Page 1
, Name: Class: Date:
Chapter 01 2025 - Comprehensive
11. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is
involved.
a. True
b. False
12. Two persons who live in the same state but in different counties may not be subject to the same general sales
tax rate.
a. True
b. False
13. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the
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same rate.
a. True
b. False
14. Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be
justified on both economic and social grounds.
a. True
b. False
15. A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA
coverage.
a. True
b. False
16. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on
additional income tax assessments by the IRS.
a. True
b. False
17. Not all of the states that impose a general sales tax also have a use tax.
a. True
b. False
18. States impose either a state income tax or a general sales tax, but not both types of taxes.
a. True
b. False
19. The amount of the state excise taxes on gasoline varies from state to state.
a. True
b. False
20. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.
The 20% negligence penalty will apply to $25,000.
a. True
b. False
Page 2
,Mbuthia
,Test Bank for South-Western Federal Taxation 2025: Comprehensive 2025 48e
Young
Chapter 01 2025 - Comprehensive
Answers Included ✅
Indicate whether the statement is true or false.
1. If more IRS audits are producing a higher number of no change results, this indicates increased compliance on
the part of taxpayers.
a. True
b. False
2. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied
tax rates from a low of 1% to a high of 6%.
a. True
Mbuthia
b. False
3. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
4. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
a. True
b. False
5. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
b. False
6. The Federal estate and gift taxes are examples of progressive rate taxes.
a. True
b. False
7. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
a. True
b. False
8. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
9. To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward of excess
charitable contributions of a particular year to other years.
a. True
b. False
10. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
a. True
b. False
Page 1
, Name: Class: Date:
Chapter 01 2025 - Comprehensive
11. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is
involved.
a. True
b. False
12. Two persons who live in the same state but in different counties may not be subject to the same general sales
tax rate.
a. True
b. False
13. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the
Mbuthia
same rate.
a. True
b. False
14. Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be
justified on both economic and social grounds.
a. True
b. False
15. A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA
coverage.
a. True
b. False
16. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on
additional income tax assessments by the IRS.
a. True
b. False
17. Not all of the states that impose a general sales tax also have a use tax.
a. True
b. False
18. States impose either a state income tax or a general sales tax, but not both types of taxes.
a. True
b. False
19. The amount of the state excise taxes on gasoline varies from state to state.
a. True
b. False
20. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.
The 20% negligence penalty will apply to $25,000.
a. True
b. False
Page 2
