Fall 2020 ACCT 3353 02 Federal Taxation
Concepts - Exam 1 Questions &
Answers 100% Correct!!
Which of the following are components of the FICA tax? - ANSWERSSocial Security tax
and Medicare tax
Who must use the tax table method to calculate their tax liability? - ANSWERSBill
Johnson whose taxable income is $36,000
Stephanie, a calendar year taxpayer, filed her 2019 tax return on February 12, 2020. If
her return does not omit gross income in excess of 25%, what is the latest date the IRS
could assess an additional 2019 tax liability against her? - ANSWERSApril 15, 2023
Which of the following is the primary goal of studying taxation? - ANSWERSBeing able
to recognize issues (or transactions) that have tax implications
Which of the following taxpayers is most likely NOT to be audited by the IRS? -
ANSWERSDanny whose gross income of $36,000 was from wages that were in
substantial agreement with the amount reported to the IRS by his employer
Using the 2019 Tax Rate Schedule, calculate the liability for Thomas Jackson. Mr.
Jackson is a single taxpayer and has taxable income of $87,454. -
ANSWERS$15,163.46
(Response Feedback:
$87,454 - $84,200 = $3,254
$3,254 x 24% = $780.96 + $14,382.50 = $15,163.46)
While preparing your client's 2019 taxes, you discover that the client materially
overstated the amount paid for large piece of equipment in 2018. This error caused
2018 depreciation expense to be materially overstated and will materially overstate
2019 depreciation expense. When you call the client and advise him to amend the 2018
return, he informs you that he is unwilling to amend the 2018 return and wants to play
the audit lottery. To ensure compliance with the Code of Professional Conduct, what
course of action should you take? - ANSWERSWithdraw from the engagement
What is the Federal income tax base? - ANSWERSTaxable income
Which of the following is required to become a paid tax preparer? -
ANSWERSObtaining a Preparer Identification Number (PTIN) from the IRS
, Which type of regulations provide the least amount of legal authority? -
ANSWERSProposed Regulations
Where does Dr. England suggest beginning tax research? - ANSWERSGoogle Search
Who is the client in a Kovel engagement? - ANSWERSAttorney
Which court does not require the taxpayer to pay the tax deficiency before filing a
lawsuit? - ANSWERSU.S. Tax Court
Your client resides in Huntsville, Texas. She is currently involved in a dispute with the
IRS. While performing research, you discovered several court cases that support her
treatment of the transaction is question. Of the court cases, which of the following
provides the greatest legal support for her treatment of the transaction? -
ANSWERSU.S. Court of Appeals for the Fifth Circuit
Which type of IRS pronouncement provides an interpretation on how to comply with the
tax law? - ANSWERSRevenue Procedures
In which of the following situations does Texas' accountant-privilege rule apply? -
ANSWERSA request received by an accountant from a local newspaper asking for a
copy of the mayor's last tax return
Which legal authority would provide the least support in a dispute with the IRS? -
ANSWERSCommentary from a tax research service
What is the primary purpose of tax planning? - ANSWERSTo maximize the taxpayer's
after-tax wealth
Where would your client appeal a ruling issued by the United States District Court for
the Southern District of Texas? - ANSWERSU.S. Court of Appeals for the Fifth Circuit
Juan and Inez file Married, Filing Jointly. For 2019, Juan was 67 and Inez was 64. Inez
is blind and deaf. What is their standard deduction? - ANSWERS$27,000
(Response Feedback:
Standard $24,400
Additional Age $1,300
Additional Blind $1,300)
Bobby and Rebecca are married and have a 13 year-old daughter, Alicia. During the
current year, they separate, and Bobby moved to his mother's house on May 5th. Bobby
never came back to the marital home. Alicia continued to live with Rebecca for the
remainder of the year. Rebecca paid more than half of the cost of maintaining the
household, which was the principal home for Alicia for more than half of the year. Bobby
and Rebecca were not legally divorced on 12/31, and Rebecca did not release Alicia's
dependency to Bobby. What are the filing statuses for Bobby and Rebecca for the tax
Concepts - Exam 1 Questions &
Answers 100% Correct!!
Which of the following are components of the FICA tax? - ANSWERSSocial Security tax
and Medicare tax
Who must use the tax table method to calculate their tax liability? - ANSWERSBill
Johnson whose taxable income is $36,000
Stephanie, a calendar year taxpayer, filed her 2019 tax return on February 12, 2020. If
her return does not omit gross income in excess of 25%, what is the latest date the IRS
could assess an additional 2019 tax liability against her? - ANSWERSApril 15, 2023
Which of the following is the primary goal of studying taxation? - ANSWERSBeing able
to recognize issues (or transactions) that have tax implications
Which of the following taxpayers is most likely NOT to be audited by the IRS? -
ANSWERSDanny whose gross income of $36,000 was from wages that were in
substantial agreement with the amount reported to the IRS by his employer
Using the 2019 Tax Rate Schedule, calculate the liability for Thomas Jackson. Mr.
Jackson is a single taxpayer and has taxable income of $87,454. -
ANSWERS$15,163.46
(Response Feedback:
$87,454 - $84,200 = $3,254
$3,254 x 24% = $780.96 + $14,382.50 = $15,163.46)
While preparing your client's 2019 taxes, you discover that the client materially
overstated the amount paid for large piece of equipment in 2018. This error caused
2018 depreciation expense to be materially overstated and will materially overstate
2019 depreciation expense. When you call the client and advise him to amend the 2018
return, he informs you that he is unwilling to amend the 2018 return and wants to play
the audit lottery. To ensure compliance with the Code of Professional Conduct, what
course of action should you take? - ANSWERSWithdraw from the engagement
What is the Federal income tax base? - ANSWERSTaxable income
Which of the following is required to become a paid tax preparer? -
ANSWERSObtaining a Preparer Identification Number (PTIN) from the IRS
, Which type of regulations provide the least amount of legal authority? -
ANSWERSProposed Regulations
Where does Dr. England suggest beginning tax research? - ANSWERSGoogle Search
Who is the client in a Kovel engagement? - ANSWERSAttorney
Which court does not require the taxpayer to pay the tax deficiency before filing a
lawsuit? - ANSWERSU.S. Tax Court
Your client resides in Huntsville, Texas. She is currently involved in a dispute with the
IRS. While performing research, you discovered several court cases that support her
treatment of the transaction is question. Of the court cases, which of the following
provides the greatest legal support for her treatment of the transaction? -
ANSWERSU.S. Court of Appeals for the Fifth Circuit
Which type of IRS pronouncement provides an interpretation on how to comply with the
tax law? - ANSWERSRevenue Procedures
In which of the following situations does Texas' accountant-privilege rule apply? -
ANSWERSA request received by an accountant from a local newspaper asking for a
copy of the mayor's last tax return
Which legal authority would provide the least support in a dispute with the IRS? -
ANSWERSCommentary from a tax research service
What is the primary purpose of tax planning? - ANSWERSTo maximize the taxpayer's
after-tax wealth
Where would your client appeal a ruling issued by the United States District Court for
the Southern District of Texas? - ANSWERSU.S. Court of Appeals for the Fifth Circuit
Juan and Inez file Married, Filing Jointly. For 2019, Juan was 67 and Inez was 64. Inez
is blind and deaf. What is their standard deduction? - ANSWERS$27,000
(Response Feedback:
Standard $24,400
Additional Age $1,300
Additional Blind $1,300)
Bobby and Rebecca are married and have a 13 year-old daughter, Alicia. During the
current year, they separate, and Bobby moved to his mother's house on May 5th. Bobby
never came back to the marital home. Alicia continued to live with Rebecca for the
remainder of the year. Rebecca paid more than half of the cost of maintaining the
household, which was the principal home for Alicia for more than half of the year. Bobby
and Rebecca were not legally divorced on 12/31, and Rebecca did not release Alicia's
dependency to Bobby. What are the filing statuses for Bobby and Rebecca for the tax
