TEST BANK FOR
South-Western Federal Taxation 2025: Individual Income Taxes 48e Young
Chapter 1-20
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.
wis
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
epr
5. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
a. True
of
b. False
wiseprof
,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.
wis
epr
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
a. True
of
b. False
wiseprof
, 10. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
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
wis
b. False
14. 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
15. 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.
epr
a. True
b. False
16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
of
b. False
wiseprof
, a. True
b. False
17. 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
18. An inheritance tax is a tax on a decedent’s right to pass property at death.
wis
epr
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
of
b. False
wiseprof
South-Western Federal Taxation 2025: Individual Income Taxes 48e Young
Chapter 1-20
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.
wis
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
epr
5. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
a. True
of
b. False
wiseprof
,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.
wis
epr
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
a. True
of
b. False
wiseprof
, 10. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
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
wis
b. False
14. 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
15. 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.
epr
a. True
b. False
16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
of
b. False
wiseprof
, a. True
b. False
17. 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
18. An inheritance tax is a tax on a decedent’s right to pass property at death.
wis
epr
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
of
b. False
wiseprof
