SOLUTIONS FOR SOUTH-WESTERN FEDERAL TAXATION 2026|CORRECT
ANSWERS|GUARANTTEED PASS
States without sales or use taxes -CORRECT ANSWER-Alaska, Delaware, Montana, New
Hampshire, and Oregon
Severance Taxes -CORRECT ANSWER-•Tax on natural resources extracted
•Important revenue source for states rich in natural resources
Example: oil, gas, iron ore, or coal etc
Taxes on Transfers at Death -CORRECT ANSWER-•Tax on the right to transfer property or to
receive property upon the death of the owner
Classified as an estate tax -CORRECT ANSWER-if imposed on right to pass property at death
•Classified as an inheritance tax -CORRECT ANSWER-If imposed on the right to receive
property from a decedent
Unified Transfer Tax Credit -CORRECT ANSWER-A unified transfer tax credit reduces or
eliminates the estate tax liability for certain estates.•For 2021, the credits exempt tax base
up to $11,700,000
Types of audits -CORRECT ANSWER-•Correspondence audit
•Office audit
•Usually restricted in scope and conducted in IRS offices
•Field audit
•Involves examination of numerous items reported on the return and is conducted at the
taxpayer's location or that of the taxpayer's representative
ANSWERS|GUARANTTEED PASS
States without sales or use taxes -CORRECT ANSWER-Alaska, Delaware, Montana, New
Hampshire, and Oregon
Severance Taxes -CORRECT ANSWER-•Tax on natural resources extracted
•Important revenue source for states rich in natural resources
Example: oil, gas, iron ore, or coal etc
Taxes on Transfers at Death -CORRECT ANSWER-•Tax on the right to transfer property or to
receive property upon the death of the owner
Classified as an estate tax -CORRECT ANSWER-if imposed on right to pass property at death
•Classified as an inheritance tax -CORRECT ANSWER-If imposed on the right to receive
property from a decedent
Unified Transfer Tax Credit -CORRECT ANSWER-A unified transfer tax credit reduces or
eliminates the estate tax liability for certain estates.•For 2021, the credits exempt tax base
up to $11,700,000
Types of audits -CORRECT ANSWER-•Correspondence audit
•Office audit
•Usually restricted in scope and conducted in IRS offices
•Field audit
•Involves examination of numerous items reported on the return and is conducted at the
taxpayer's location or that of the taxpayer's representative
