Test Bank for South-Western Federal Taxation 2025, Comprehensive 2025 48th Edition by (Young/ Persellin) All 30 Chapters Covered & Verified, Complete Latest Edition.

Test Bank for South-Western Federal Taxation 2025, Comprehensive 2025 48th Edition by (Young/ Persellin) All 30 Chapters Covered & Verified, Complete Latest Edition. Answers Included at the end of each chapter Chapter 01 2025 - Comprehensive Indicate whether the statement is true or false. 1. 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 2. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 1% to a high of 6%. a. True b. False 3. Stealth taxes have the effect of generating additional taxes from all taxpayers. a. True b. False 4. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS. a. True b. False 5. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven. a. True b. False 6. The Federal estate and gift taxes are examples of progressive rate taxes. a. True b. False 7. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year. a. True b. False 8. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations. a. True b. False 9. To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward of excess charitable contributions of a particular year to other years. a. True b. False 10. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules. a. True b. False Page 1 Chapter 01 2025 - Comprehensive Answers Included at the end of each chapter 11. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved. a. True b. False 12. Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate. a. True b. False 13. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate. a. True b. False 14. Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds. a. True b. False 15. A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA coverage. a. True b. False 16. 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. a. True b. False 17. Not all of the states that impose a general sales tax also have a use tax. a. True b. False 18. States impose either a state income tax or a general sales tax, but not both types of taxes. a. True b. False 19. The amount of the state excise taxes on gasoline varies from state to state. a. True b. False 20. 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 Page 2 Name: Class: Date: Chapter 01 2025 - Comprehensive 21. The annual exclusion, currently $18,000, is available for gift and estate tax purposes. a. True b. False 22. In preparing an income tax return, the use of a client’s estimates is not permitted. a. True b. False 23. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations. a. True b. False 24. A major advantage of a flat tax type of income tax is its simplicity. a. True b. False 25. The value added tax (VAT) has not had wide acceptance in the international community. a. True b. False 26. An inheritance tax is a tax on a decedent’s right to pass property at death. a. True b. False 27. The civil fraud penalty can entail large fines and possible incarceration. a. True b. False 28. The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty. a. True b. False 29. A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis. a. True b. False 30. In preparing a tax return, all questions on the return must be answered. a. True b. False Page 3 Name: Class: Date: Chapter 01 2025 - Comprehensive 31. For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments). a. True b. False 32. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty. a. True b. False 33. 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 34. Mona inherits her mother’s personal residence, which she converts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levied on the properties. a. True b. False 35. If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS. a. True b. False 36. No state may offer an income tax amnesty program more than once. a. True b. False 37. When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes. a. True b. False 38. The Medicare component of the FICA tax (1.45% on wages) is progressive as the tax due increases as wages increase. a. True b. False.