Federal Taxation - Exam 1 UPDATED Exam
Questions and CORRECT Answers
Decisions in which taxes are an influencing factor - CORRECT ANSWER - Taxes affect
many aspects of personal, business, and political decisions (1-3)
Components necessary to calculate tax - CORRECT ANSWER - Tax=Tax Base x Tax Rate
Definition of tax - CORRECT ANSWER - A payment required by a government that is
unrelated to any specific benefit or services received from the government
Proportional Tax Rate Structure - CORRECT ANSWER - Tax rate stays the same like sales
tax
Progressive Tax Rate Structure - CORRECT ANSWER - Increasing marginal tax rate as tax
base increases. As tax base increases both marginal tax rate and taxes paid increase. Such as
federal and most income state taxes
Regressive Tax Rate structure - CORRECT ANSWER - Decreasing marginal tax rate as the
tax base increases. Examples are social security tax and federal and state unemployment taxes
Federal revenue - CORRECT ANSWER - Income tax (most significant)
Employment tax (2nd largest)
Excise Tax (Particular products like alcohol or services like telephone use)
Estate and Gifts (least significant)
State revenue - CORRECT ANSWER - Income tax
Sales & Use tax
Property Tax
Excise Tax
, Property Tax - CORRECT ANSWER - Real property-land, structures, improvements
permanently attached
Personal Property-boats, private planes, stocks, bonds
Horizontal Equity Concept - CORRECT ANSWER - Two taxpayers in similar situations pay
the same tax. The failures to this concept are due to tax preferences
Certainty - CORRECT ANSWER - Taxpayers should be able to determine when to pay the
tax, where to pay the tax , and how to determine the tax.
Factors that determine filing necessity - CORRECT ANSWER - Filing status, age, and gross
income
Refunds - CORRECT ANSWER - Taxpayers due a refund should file a return to receive the
refund, even if they are not required to file a tax return. Gross income determine whether a tax
return is required, not a refund due.
Individual taxpayers due date - CORRECT ANSWER - April 15th
C Corps - CORRECT ANSWER - April 15th.
If year end is June 30th then due September 15th
Partnerships & S Corp - CORRECT ANSWER - March 15th
Extensions - CORRECT ANSWER - Individual, partnership, & S Corps can request a 6
month extension.
C Corps can request an automatic six or seven month extension depending on corp's year end
Questions and CORRECT Answers
Decisions in which taxes are an influencing factor - CORRECT ANSWER - Taxes affect
many aspects of personal, business, and political decisions (1-3)
Components necessary to calculate tax - CORRECT ANSWER - Tax=Tax Base x Tax Rate
Definition of tax - CORRECT ANSWER - A payment required by a government that is
unrelated to any specific benefit or services received from the government
Proportional Tax Rate Structure - CORRECT ANSWER - Tax rate stays the same like sales
tax
Progressive Tax Rate Structure - CORRECT ANSWER - Increasing marginal tax rate as tax
base increases. As tax base increases both marginal tax rate and taxes paid increase. Such as
federal and most income state taxes
Regressive Tax Rate structure - CORRECT ANSWER - Decreasing marginal tax rate as the
tax base increases. Examples are social security tax and federal and state unemployment taxes
Federal revenue - CORRECT ANSWER - Income tax (most significant)
Employment tax (2nd largest)
Excise Tax (Particular products like alcohol or services like telephone use)
Estate and Gifts (least significant)
State revenue - CORRECT ANSWER - Income tax
Sales & Use tax
Property Tax
Excise Tax
, Property Tax - CORRECT ANSWER - Real property-land, structures, improvements
permanently attached
Personal Property-boats, private planes, stocks, bonds
Horizontal Equity Concept - CORRECT ANSWER - Two taxpayers in similar situations pay
the same tax. The failures to this concept are due to tax preferences
Certainty - CORRECT ANSWER - Taxpayers should be able to determine when to pay the
tax, where to pay the tax , and how to determine the tax.
Factors that determine filing necessity - CORRECT ANSWER - Filing status, age, and gross
income
Refunds - CORRECT ANSWER - Taxpayers due a refund should file a return to receive the
refund, even if they are not required to file a tax return. Gross income determine whether a tax
return is required, not a refund due.
Individual taxpayers due date - CORRECT ANSWER - April 15th
C Corps - CORRECT ANSWER - April 15th.
If year end is June 30th then due September 15th
Partnerships & S Corp - CORRECT ANSWER - March 15th
Extensions - CORRECT ANSWER - Individual, partnership, & S Corps can request a 6
month extension.
C Corps can request an automatic six or seven month extension depending on corp's year end
