ACCT 3310-CHAPTER 2 Questions with Correct Solutions
Question:
1. Juanita, a Texas resident (5th Circuit), is researching a tax question and finds a 5th Circuit
case ruling that is favorable and a 9th Circuit case that is unfavorable. Which circuit case has
more "authoritative weight"?
Answer:
5th Circuit. (The 5th Circuit case has more authoritative weight because Juanita lives in the
5th Circuit. If Juanita lived in the 6th Circuit, the 5th and 9th Circuit cases would have equal
weight. Juanita should be careful to analyze both cases to understand the underlying
reasoning for the different opinions.)
Question:
2. Jamarcus, a full-time student, earned $2,500 this year from a summer job. He had no other
income this year and will have zero federal income tax liability this year. His employer
withheld $300 of federal income tax from his summer pay. Is Jamarcus required to file a tax
return? Should Jamarcus file a tax return?
Answer:
Jamarcus is not required to file an income tax return because his gross income of $2,500 is
well below the gross income threshold for a single taxpayer. However, he should file a tax
return to receive a refund of the $300 previously withheld
Question:
3. Campbell's tax return was audited because she failed to report interest she earned on her
tax return. What IRS audit selection method identified her tax return?
Answer:
The information matching program compares the taxpayer's tax return to information
submitted to the IRS from other taxpayers (banks, employers, mutual funds, brokerage
companies, mortgage companies, etc.). Information matched includes items such as wages
(Form W-2 submitted by employers), interest income (Form 1099-INT submitted by banks),
dividend income (Form 1099-DIV submitted by brokerage companies, etc.), etc.
Question:
4. The estate of Monique Chablis earned $450 of income this year. Is the estate required to
file an income tax return?
Answer:
No, because the estate's gross income is less than $600, the estate is not required to file an
income tax return
Question:
1. Juanita, a Texas resident (5th Circuit), is researching a tax question and finds a 5th Circuit
case ruling that is favorable and a 9th Circuit case that is unfavorable. Which circuit case has
more "authoritative weight"?
Answer:
5th Circuit. (The 5th Circuit case has more authoritative weight because Juanita lives in the
5th Circuit. If Juanita lived in the 6th Circuit, the 5th and 9th Circuit cases would have equal
weight. Juanita should be careful to analyze both cases to understand the underlying
reasoning for the different opinions.)
Question:
2. Jamarcus, a full-time student, earned $2,500 this year from a summer job. He had no other
income this year and will have zero federal income tax liability this year. His employer
withheld $300 of federal income tax from his summer pay. Is Jamarcus required to file a tax
return? Should Jamarcus file a tax return?
Answer:
Jamarcus is not required to file an income tax return because his gross income of $2,500 is
well below the gross income threshold for a single taxpayer. However, he should file a tax
return to receive a refund of the $300 previously withheld
Question:
3. Campbell's tax return was audited because she failed to report interest she earned on her
tax return. What IRS audit selection method identified her tax return?
Answer:
The information matching program compares the taxpayer's tax return to information
submitted to the IRS from other taxpayers (banks, employers, mutual funds, brokerage
companies, mortgage companies, etc.). Information matched includes items such as wages
(Form W-2 submitted by employers), interest income (Form 1099-INT submitted by banks),
dividend income (Form 1099-DIV submitted by brokerage companies, etc.), etc.
Question:
4. The estate of Monique Chablis earned $450 of income this year. Is the estate required to
file an income tax return?
Answer:
No, because the estate's gross income is less than $600, the estate is not required to file an
income tax return
