Test Bank for McGraw-Hill’s Essentials of Federal Taxation 2024 Edition, 15th Edition By Brian Spilker

Test Bank for McGraw-Hill’s Essentials of Federal Taxation 2024 Edition, 15th Edition By Brian Spilker Version 1 2 Student name: 1) The following are a series of tables that may be referred to in several questions throughout your test. Please refer to these tables as needed or as directed. 2023 Tax Rate SchedulesIndividualsSchedule X-Single If taxable income is over: But not over: The tax is: $ 0 $ 11,000 10% of taxable income $ 11,000 $ 44,725 $1,100 plus 12% of the excess over $11,000 $ 44,725 $ 95,375 $5,147 plus 22% of the excess over $44,725 $ 95,375 $ 182,100 $16,290 plus 24% of the excess over $95,375 $ 182,100 $ 231,250 $37,104 plus 32% of the excess over $182,100 $ 231,250 $ 578,125 $52,832 plus 35% of the excess over $231,250 $ 578,125 — $174,238.25 plus 37% of the excess over $578,125 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 0 $ 22,000 10% of taxable income $ 22,000 $ 89,450 $2,200 plus 12% of the excess over $22,000 $ 89,450 $ 190,750 $10,294 plus 22% of the excess over $89,450 $ 190,750 $ 364,200 $32,580 plus 24% of the excess over $190,750 $ 364,200 $ 462,500 $74,208 plus 32% of the excess over $364,200 $ 462,500 $ 693,750 $105,664 plus 35% of the excess over $462,500 $ 693,750 — $186,601.50 plus 37% of the excess over $693,750 Schedule Z-Head of Household If taxable income is over: But not over: The tax is: Version 1 3 $ 0 $ 15,700 10% of taxable income Version 1 4 $ 15,700 $ 59,850 $1,570 plus 12% of the excess over $15,700 $ 59,850 $ 95,350 $6,868 plus 22% of the excess over $59,850 $ 95,350 $ 182,100 $14,678 plus 24% of the excess over $95,350 $ 182,100 $ 231,250 $35,498 plus 32% of the excess over $182,100 $ 231,250 $ 578,100 $51,226 plus 35% of the excess over $231,250 $ 578,100 — $172,623.50 plus 37% of the excess over $578,100 Schedule Y-2-Married Filing Separately If taxable income is over: But not over: The tax is: $ 0 $ 11,000 10% of taxable income $ 11,000 $ 44,725 $1,100 plus 12% of the excess over $11,000 $ 44,725 $ 95,375 $5,147 plus 22% of the excess over $44,725 $ 95,375 $ 182,100 $16,290 plus 24% of the excess over $95,375 $ 182,100 $ 231,250 $37,104 plus 32% of the excess over $182,100 $ 231,250 $ 346,875 $52,832 plus 35% of the excess over $231,250 $ 346,875 — $93,300.75 plus 37% of the excess over $346,875 2) Taxes influence many types of business decisions but generally do not influence personal decisions. ⊚ true ⊚ false Version 1 5 3) Taxes influence business decisions such as where a business should locate or how a business should be structured. ⊚ true ⊚ false 4) Tax policy rarely plays an important part in presidential campaigns. ⊚ true ⊚ false 5) Margaret recently received a parking ticket. This is a common example of a local tax. ⊚ true ⊚ false 6) George recently paid $50 to renew his driver's license. The $50 payment is considered a tax. ⊚ true ⊚ false 7) A 1 percent charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools. ⊚ true ⊚ false 8) One key characteristic of a tax is that it is a required payment to a governmental agency. ⊚ true ⊚ false 9) Common examples of sin taxes include the taxes imposed on airline tickets and gasoline. ⊚ true ⊚ false Version 1 6 10) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the products being taxed. ⊚ true ⊚ false 11) In addition to raising revenues, specific U.S. taxes may have other objectives (e.g., economic or social objectives). ⊚ true ⊚ false 12) The two components of the tax calculation are the tax rate and the taxpayer's status. ⊚ true ⊚ false 13) The tax base for the federal income tax is taxable income. ⊚ true ⊚ false 14) A flat tax is an example of a graduated tax system. ⊚ true ⊚ false 15) The main difficulty in calculating an income tax is determining the correct amount of the tax base. ⊚ true ⊚ false 16) A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning. ⊚ true ⊚ false Version 1 7 17) The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate. ⊚ true ⊚ false 18) The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income. ⊚ true ⊚ false 19) In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate. ⊚ true ⊚ false 20) In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate. ⊚ true ⊚ false 21) A sales tax is a common example of a progressive tax rate structure. ⊚ true ⊚ false 22) In terms of effective tax rates, the sales tax can be viewed as a regressive tax. ⊚ true ⊚ false 23) While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax. ⊚ true ⊚ false Version 1 8 24) The largest federal tax, in terms of revenue collected, is the Social Security tax. ⊚ true ⊚ false 25) The 9 th Amendment to the U.S. Constitution removed all doubt that a federal income tax was allowed under the U.S. Constitution. ⊚ true ⊚ false 26) A common example of an employment-related tax is the Medicare tax. ⊚ true ⊚ false 27) Self-employment taxes are charged on self-employment income in addition to any federal income tax. ⊚ true ⊚ false 28) Excise taxes are typically levied on the value of a good purchased. ⊚ true ⊚ false 29) The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life. ⊚ true ⊚ false 30) A use tax is typically imposed by a state on goods purchased within the state. ⊚ true ⊚ false Version 1 9 31) Property taxes may be imposed on both real and personal property. ⊚ true ⊚ false 32) Relative to explicit taxes, implicit taxes are much easier to estimate. ⊚ true ⊚ false 33) Implicit taxes are indirect taxes on tax-favored assets. ⊚ true ⊚ false 34) Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues. ⊚ true ⊚ false 35) The income and substitution effects are two opposing effects that one could consider in static forecasting. ⊚ true ⊚ false 36) Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations. ⊚ true ⊚ false 37) Regressive tax rate structures are typically considered to be vertically equitable. ⊚ true ⊚ false Version 1 10 38) Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems. ⊚ true ⊚ false 39) One must consider the "economy" criterion in evaluating tax systems from both the taxpayer's and the government's perspective. ⊚ true ⊚ false 40) Taxes influence which of the following decisions? A) Business decisions B) Personal decisions C) Political decisions D) Investment decisions E) All of the choices are correct. 41) Margaret was issued a $150 speeding ticket. This is: A) a tax because payment is required by law. B) a tax because the payment is not related to any specific benefit received from the government agency collecting the ticket. C) not a tax because it is considered a fine intended to punish illegal behavior. D) a tax because it is imposed by a government agency. E) not a tax because Margaret could have avoided payment if she did not speed. Version 1 11 42) Which of the following is a tax? 1. A 1 percent special sales tax for funding local road construction. 2. A fee paid to the state for a license to practice as an attorney. 3. An income tax imposed by Philadelphia on persons working within the city limits. 4. A special property assessment for installing a new water system in the taxpayer's neighborhood. A) Only I is correct. B) Only IV is correct. C) Only III is correct. D) III and IV are correct. E) I and III are correct. 43) Which of the following is considered a tax? A) Tolls B) Parking meter fees C) Annual licensing fees D) A local surcharge paid on retail sales to fund public schools E) Entrance fees paid at national parks 44) Earmarked taxes are: A) taxes assessed only on certain taxpayers. B) taxes assessed to fund a specific purpose. C) taxes assessed for only a specific time period. D) taxes assessed to discourage less desirable behavior. E) None of the choices are correct. 45) Sin taxes are: A) taxes assessed by religious organizations. B) taxes assessed on certain illegal acts. C) taxes assessed to discourage less desirable behavior. D) taxes assessed to fund a specific purpose. E) None of the choices are correct. Version 1 12 46) To calculate a tax, you need to know: 1. the tax base 2. the taxing agency 3. the tax rate 4. the purpose of the tax A) Only I is correct. B) Only IV is correct. C) Only III is correct. D) Items I through IV are correct. E) I and III are correct. 47) Which of the following is not an example of a graduated tax rate structure? A) Progressive tax rate structure B) Proportional tax rate structure C) U.S. federal income tax D) Regressive tax rate structure E) None of the choices are correct. 48) The difficulty in calculating a tax is typically in the determination of: A) the correct tax rate. B) where to file the tax return. C) the tax base. D) the due date for the return. E) None of the choices are correct. 49) Which of the following is not one of the basic tax rate structures? A) Proportional B) Equitable C) Regressive D) Progressive E) All of these are different kinds of the basic tax rate structures. Version 1 13 50) Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2023, how much federal tax will he owe? (Use tax rate schedule.) Note: Round your final answer to the nearest whole dollar. A) $13,200 B) $8,508 C) $7,200 D) $6,901 E) None of the choices are correct. 51) Marc, a single taxpayer, earns $61,400 in taxable income and $5,140 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2023, how much federal tax will he owe? (Use tax rate schedule.) A) $13,550 B) $8,816 C) $7,368 D) $7,209 E) None of the choices are correct. 52) Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2023, what is his average tax rate? (Use tax rate schedule.) Note: Round your final answer to two decimal places. A) 14.18 percent B) 11.50 percent C) 11.27 percent D) 22.00 percent E) None of the choices are correct. Version 1 14 53) Marc, a single taxpayer, earns $61,600 in taxable income and $5,160 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2023, what is his average tax rate? (Use tax rate schedule.) Note: Round your final answer to two decimal places. A) 14.38 percent B) 11.70 percent C) 11.47 percent D) 22.00 percent E) None of the choices are correct. 54) Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2023, what is his effective tax rate? (Use tax rate schedule.) Note: Round your final answer to two decimal places. A) 22 percent B) 13.09 percent C) 14.98 percent D) 10.62 percent E) None of the choices are correct. 55) Marc, a single taxpayer, earns $61,200 in taxable income and $5,120 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2023, what is his effective tax rate? (Use tax rate schedule.) Note: Round your final answer to two decimal places. A) 22.14 percent B) 13.23 percent C) 15.13 percent D) 10.76 percent E) None of the choices are correct. Version 1 15 56) Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2023, what is his current marginal tax rate? (Use tax rate schedule.) A) 12.00 percent B) 22.00 percent C) 24.00 percent D) 32.00 percent E) None of the choices are correct. 57) Marc, a single taxpayer, earns $260,000 in taxable income and $8,000 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2023, what is his current marginal tax rate? (Use tax rate schedule.) A) 25.00 percent B) 35.00 percent C) 37.00 percent D) 45.00 percent E) None of the choices are correct. 58) The city of Granby, Colorado, recently enacted a 1.5 percent surcharge on vacation cabin rentals that will fund the city's new elementary school. This surcharge is an example of . A) a sin tax to discourage undesirable behavior B) a government fine C) an earmarked tax D) a sin tax to discourage undesirable behavior and an earmarked tax E) None of the choices are correct. 59) The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this? A) A sin tax B) An excise tax C) It is not a tax; it is a fine D) A sin tax and an excise tax are correct. E) None of the choices are correct.