TEST BANK South-Western Federal Taxation 2026: Individual Income Taxes, 48th Edition by James Young Complete Chapters 1-20

TEST BANK South-Western Federal Taxation 2025: Individual Income Taxes, 48th Edition by James Young Complete Chapters 1-20. TABLE OF CONTENTS Chapter 1: An Introduction to Taxation and Understanding the Federal Tax Law Chapter 2: Working with the Tax Law Chapter 03: Tax Formula and Tax Determination Chapter 04: Gross Income: Concepts and Inclusions Chapter 05: Gross Income: Exclusions Chapter 06: Deductions and Losses: In General Chapter 07: Deductions and Losses: Certain Business Expenses Chapter 08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09: Deductions: Employee and Self-Employed-Related Expense Chapter 10: Deductions and Losses: Certain Itemized Deductions Chapter 11: Investor Losses Chapter 12: Alternative Minimum Tax Chapter 13: Tax Credits and Payment Procedures Chapter 14: Property Transactions: Determination of Gain or Loss and Chapter 15: Property Transactions: Nontaxable Exchanges Chapter 16: Property Transactions: Capital Gains and Losses Chapter 17: Property Transactions: 1231 and Recapture Provisions Chapter 18: Accounting Periods and Methods Chapter 19: Deferred Compensation Chapter 20: Corporations and Partnerships Page 2 Page1 South-Western Federal Taxation 2025: Individual Income Taxes 48e Young Chapter 01 2025 Individuals Answers Included Indicate whether the statement is true or false. 1. Sales made over the internet are not exempt from the application of a general sales (or use) tax. a. True b. False 2. 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 3. Ultimately, most taxes are paid by individuals. a. True b. False 4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same. a. True b. False 5. The principal objective of the FUTA tax is to provide some measure of retirement security. a. True b. False 6. 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 7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes. a. True b. False 8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024. The refund need not include interest. a. True b. False 9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary. a. True b. False 10. For Federal income tax purposes, there never has been a general amnesty period. a. True b. False Name: Class: Date: Chapter 01 2025 Individuals Page2 11. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid. a. True b. False 12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain in the year the installment sale occurs. a. True b. False 13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS. a. True b. False 14. Stealth taxes have the effect of generating additional taxes from all taxpayers. a. True b. False 15. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept. a. True b. False 16. An inheritance tax is a tax on a decedent’s right to pass property at death. a. True b. False 17. When interest is charged on a deficiency, any part of a month counts as a full month. a. True b. False 18. The majority of IRS audits are handled by correspondence. a. True b. False 19. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations. a. True b. False 20. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within a family unit. a. True b. False 21. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift. a. True b. False 22. 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 Name: Class: Date: Chapter 01 2025 Individuals Page3 23. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven. a. True b. False 24. In preparing an income tax return, the use of a client’s estimates is not permitted. a. True b. False 25. The Federal estate and gift taxes are examples of progressive rate taxes. a. True b. False 26. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty. a. True b. False 27. For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud. a. True b. False 28. Under Clint’s will, all of his property passes to either the Lutheran Church or to his spouse. No Federal estate tax will be due on Clint’s death. a. True b. False 29. For state income tax purposes, some states allow a credit for dependents rather than a deduction. a. True b. False Name: Class: Date: Chapter 01 2025 Individuals a. True b. False Page4 30. 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 31. As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase) the amount of the standard deduction allowed to individual taxpayers. a. True b. False 32. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations. a. True b. False 33. When a state decouple