Taxation 1 Pre-Assessment UPDATED
ACTUAL Exam Questions and CORRECT
Answers
What year was the U.S income tax on individuals permanently established? - CORRECT
ANSWER - 1913
What is the highest level of legislative authority of tax law in the United States? - CORRECT
ANSWER - Internal Revenue Code
What are two primary sources of tax law in the United States? - CORRECT ANSWER -
Court Decisions and Revenue Rulings
What is a certainty when evaluating a tax system? - CORRECT ANSWER - Taxes can be
estimated if annual income is the same
What is an example of equity when evaluating a tax system? - CORRECT ANSWER -
Each taxpayer pays a different amount based on their income level
What increases the tax base of an individual? - CORRECT ANSWER - Interest Income
What is the nature of a progressive tax rate structure - CORRECT ANSWER - The rate of
tax increases as the tax base increases
A single salaried individual who is not operating a business earned 350,000 of taxable income
last year.
what is the individual's tax liability? - CORRECT ANSWER - 98,190
, Which tax is considered proportional? - CORRECT ANSWER - Excise tax
Which entities are considered flow through entities in the U.S Tax System? - CORRECT
ANSWER - Limited Liability Partnerships
A taxpayer fails to report income that exceeds 25% of reported gross income but files the return
on time.
How many years after a return was originally due might the statute of limitations expire? -
CORRECT ANSWER - 6 years
Which tax practice component includes understanding the facts, identifying the issues, locating
and analyzing tax authorities and documenting and communicating the results? - CORRECT
ANSWER - Tax Research
What are Exclusions? - CORRECT ANSWER - Items of income that the tax law
specifically says are not taxable
A single individual with two dependents works at a bank and earns wages of $50,000. She
received a $6,000 gift from a parent to go to Europe and inherited $10,000 from an uncle when
he died. Her municipal bond paid $500 interest. This individual has itemized deductions of
$7,000.
what is the Tax Liability? - CORRECT ANSWER - $3,568
A married individual with one dependent earned wages of $63,000. The individual won $2,000
at a casino, inherited $5,000 and has itemized deductions of $4,1000.
What is the tax liability? - CORRECT ANSWER - $4,539
ACTUAL Exam Questions and CORRECT
Answers
What year was the U.S income tax on individuals permanently established? - CORRECT
ANSWER - 1913
What is the highest level of legislative authority of tax law in the United States? - CORRECT
ANSWER - Internal Revenue Code
What are two primary sources of tax law in the United States? - CORRECT ANSWER -
Court Decisions and Revenue Rulings
What is a certainty when evaluating a tax system? - CORRECT ANSWER - Taxes can be
estimated if annual income is the same
What is an example of equity when evaluating a tax system? - CORRECT ANSWER -
Each taxpayer pays a different amount based on their income level
What increases the tax base of an individual? - CORRECT ANSWER - Interest Income
What is the nature of a progressive tax rate structure - CORRECT ANSWER - The rate of
tax increases as the tax base increases
A single salaried individual who is not operating a business earned 350,000 of taxable income
last year.
what is the individual's tax liability? - CORRECT ANSWER - 98,190
, Which tax is considered proportional? - CORRECT ANSWER - Excise tax
Which entities are considered flow through entities in the U.S Tax System? - CORRECT
ANSWER - Limited Liability Partnerships
A taxpayer fails to report income that exceeds 25% of reported gross income but files the return
on time.
How many years after a return was originally due might the statute of limitations expire? -
CORRECT ANSWER - 6 years
Which tax practice component includes understanding the facts, identifying the issues, locating
and analyzing tax authorities and documenting and communicating the results? - CORRECT
ANSWER - Tax Research
What are Exclusions? - CORRECT ANSWER - Items of income that the tax law
specifically says are not taxable
A single individual with two dependents works at a bank and earns wages of $50,000. She
received a $6,000 gift from a parent to go to Europe and inherited $10,000 from an uncle when
he died. Her municipal bond paid $500 interest. This individual has itemized deductions of
$7,000.
what is the Tax Liability? - CORRECT ANSWER - $3,568
A married individual with one dependent earned wages of $63,000. The individual won $2,000
at a casino, inherited $5,000 and has itemized deductions of $4,1000.
What is the tax liability? - CORRECT ANSWER - $4,539
