Federal Income Tax Exam #1
Questions & Answers (Grade A+)
What are the two important features of the tax environment? -
correct answer ✅1. pervasive- so widespread, come in so many
varieties, and affect virtually every aspect of modern life
2. dynamic - tax laws change so frequently
tax -
correct answer ✅a payment to support the cost of government. A
tax is non penal but compulsory and is not directly related to any
specific benefit provided by the government.
taxpayer -
correct answer ✅any person or organization required by law to
pay a tax to a governmental authority (in US person is defined as
individuals and corporations)
incidence -
correct answer ✅the ultimate economic burden represented by a
tax (incidence can be shifted to a 3rd party)
jurisdiction -
correct answer ✅the right of a government to levy tax on a
specific person or organization
,Federal Income Tax Exam #1
Questions & Answers (Grade A+)
Who does the federal government have jurisdiction over to tax? -
correct answer ✅any individual that is a US citizen, permanently
resides in the US, or a non US citizen or resident but earns income
from a source in the US
tax base -
correct answer ✅an item, occurrence, transaction, or activity with
respect to which a tax is levied. Tax bases are usually expressed in
monetary terms.
dollar amount of a tax formula -
correct answer ✅Tax (T) = Rate (r) x Base (B)
flat rate -
correct answer ✅a single percentage that applies to the entire tax
base
graduated rates -
correct answer ✅Multiple percentages that apply to specified
brackets of the tax base.
, Federal Income Tax Exam #1
Questions & Answers (Grade A+)
brackets -
correct answer ✅The portion of a tax base subject to a given
percentage rate in a graduated rate structure.
revenue -
correct answer ✅total tax collected by the government and
available for public use
event or transaction based tax -
correct answer ✅a tax imposed on the occurrence of a certain
event or transaction
EX: sales tax on the purchase of retail goods and services or estate
tax
activity based tax -
correct answer ✅A tax imposed on the results of an ongoing
activity in which persons or organizations engage. Taxpayers must
maintain records of the activity and report and pay taxes
EX: annual income tax
Questions & Answers (Grade A+)
What are the two important features of the tax environment? -
correct answer ✅1. pervasive- so widespread, come in so many
varieties, and affect virtually every aspect of modern life
2. dynamic - tax laws change so frequently
tax -
correct answer ✅a payment to support the cost of government. A
tax is non penal but compulsory and is not directly related to any
specific benefit provided by the government.
taxpayer -
correct answer ✅any person or organization required by law to
pay a tax to a governmental authority (in US person is defined as
individuals and corporations)
incidence -
correct answer ✅the ultimate economic burden represented by a
tax (incidence can be shifted to a 3rd party)
jurisdiction -
correct answer ✅the right of a government to levy tax on a
specific person or organization
,Federal Income Tax Exam #1
Questions & Answers (Grade A+)
Who does the federal government have jurisdiction over to tax? -
correct answer ✅any individual that is a US citizen, permanently
resides in the US, or a non US citizen or resident but earns income
from a source in the US
tax base -
correct answer ✅an item, occurrence, transaction, or activity with
respect to which a tax is levied. Tax bases are usually expressed in
monetary terms.
dollar amount of a tax formula -
correct answer ✅Tax (T) = Rate (r) x Base (B)
flat rate -
correct answer ✅a single percentage that applies to the entire tax
base
graduated rates -
correct answer ✅Multiple percentages that apply to specified
brackets of the tax base.
, Federal Income Tax Exam #1
Questions & Answers (Grade A+)
brackets -
correct answer ✅The portion of a tax base subject to a given
percentage rate in a graduated rate structure.
revenue -
correct answer ✅total tax collected by the government and
available for public use
event or transaction based tax -
correct answer ✅a tax imposed on the occurrence of a certain
event or transaction
EX: sales tax on the purchase of retail goods and services or estate
tax
activity based tax -
correct answer ✅A tax imposed on the results of an ongoing
activity in which persons or organizations engage. Taxpayers must
maintain records of the activity and report and pay taxes
EX: annual income tax
