©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Taxation 1 Pre-Assesment Exam Questions
With Correct Answers
What year was the U.S income tax on individuals permanently established? - answer✔1913
What is the highest level of legislative authority of tax law in the United States? - answer✔Internal
Revenue Code
What are two primary sources of tax law in the United States? - answer✔Court Decisions and Revenue
Rulings
What is a certainty when evaluating a tax system? - answer✔Taxes can be estimated if annual income is
the same
What is an example of equity when evaluating a tax system? - answer✔Each taxpayer pays a different
amount based on their income level
What increases the tax base of an individual? - answer✔Interest Income
What is the nature of a progressive tax rate structure - 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? - answer✔98,190
Which tax is considered proportional? - answer✔Excise tax
Which entities are considered flow through entities in the U.S Tax System? - 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? - answer✔6
years
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Which tax practice component includes understanding the facts, identifying the issues, locating and
analyzing tax authorities and documenting and communicating the results? - answer✔Tax Research
What are Exclusions? - 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? - 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? - answer✔$4,539
Which scenario represents a realization of income? - answer✔A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be taxable? - answer✔Renting a
condo for $5,000
In which situation has a taxpayer actually or constructively received income that should be included in
gross income for the current year? - answer✔The taxpayer went on vacation the last two weeks of the
year, and he instructed his employer to put the year-end paycheck in his locked desk drawer at the
office.
The taxpayer does not return and deposit the paycheck until the following January.
A taxpayer selects the accrual method for a retail business
Accounts receivable are reported net of noncollectable accounts. The beginning balance reported in the
allowance for uncollectible accounts is 4,400 and the balance at the end of the year is 4,700. Estimated
uncollectable accounts during the year are 1300.
How much is deductible for uncollectible account expenses? - answer✔$1,000
Which benefit is included in gross income according to Internal Revenue Code Section 61(a) -
answer✔Employer reducing an outstanding loan
11/05/2024 12:06 PM
Taxation 1 Pre-Assesment Exam Questions
With Correct Answers
What year was the U.S income tax on individuals permanently established? - answer✔1913
What is the highest level of legislative authority of tax law in the United States? - answer✔Internal
Revenue Code
What are two primary sources of tax law in the United States? - answer✔Court Decisions and Revenue
Rulings
What is a certainty when evaluating a tax system? - answer✔Taxes can be estimated if annual income is
the same
What is an example of equity when evaluating a tax system? - answer✔Each taxpayer pays a different
amount based on their income level
What increases the tax base of an individual? - answer✔Interest Income
What is the nature of a progressive tax rate structure - 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? - answer✔98,190
Which tax is considered proportional? - answer✔Excise tax
Which entities are considered flow through entities in the U.S Tax System? - 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? - answer✔6
years
, ©THEBRIGHT EXAM SOLUTIONS
11/05/2024 12:06 PM
Which tax practice component includes understanding the facts, identifying the issues, locating and
analyzing tax authorities and documenting and communicating the results? - answer✔Tax Research
What are Exclusions? - 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? - 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? - answer✔$4,539
Which scenario represents a realization of income? - answer✔A payment of $2,000 for stocks sold
Which type of income satisfies all three requirements for the income to be taxable? - answer✔Renting a
condo for $5,000
In which situation has a taxpayer actually or constructively received income that should be included in
gross income for the current year? - answer✔The taxpayer went on vacation the last two weeks of the
year, and he instructed his employer to put the year-end paycheck in his locked desk drawer at the
office.
The taxpayer does not return and deposit the paycheck until the following January.
A taxpayer selects the accrual method for a retail business
Accounts receivable are reported net of noncollectable accounts. The beginning balance reported in the
allowance for uncollectible accounts is 4,400 and the balance at the end of the year is 4,700. Estimated
uncollectable accounts during the year are 1300.
How much is deductible for uncollectible account expenses? - answer✔$1,000
Which benefit is included in gross income according to Internal Revenue Code Section 61(a) -
answer✔Employer reducing an outstanding loan
