C239 EXAMINATION QUESTIONS AND VERIFIED
ANSWERS
Progressive Tax Rate - Rate that increases as the tax base increases
Proportional Tax Rate - Rate that is constant regardless of the size of the tax base
Regressive Tax Rate - Rate decreases as the tax base increases
Statutory Tax Rate - Rate specified in the law
Marginal Tax Rate - Rate applicable to the next dollar of income
Average Tax Rate - Equal to the tax liability divided by taxable income
Effective Tax Rate - Equal to the taxes paid divided by the taxpayers ability to pay
Gift Tax - Tax imposed on the transfer of property by gift
What is treated as a partnership? - LLC
Public Law 86-272 - Attempted to bring consistency to the multistate income tax process
Uniform Division of Income Tax Purposes Act (UDITPA) - States and localities interested in a
coherent set of income assignment rules and it forms the basis for the income tax statutes in most of the
MTC member states
Nexus Tax - Degree of activity that must be present before a taxing jurisdiction has the right to
impose a tax on an out of state entity
Tax Cuts and Jobs Act (TCJA) - Reduced federal corporate tax rates
Who allows a jury trial? - US District Court
Recognized Gain/Loss - Portion of realized gain or loss subject to income taxation
Capital Asset - Used for 1+ years and not available for sale; usually tangible
Short Term Gain/Loss - 1 year or less
What offsets the highest taxed gain first? - Short Term Losses
How should a gain on personal property when compensated by insurance proceed? - Deferred in
an involuntary conversion
When can tax payers defer realized gains on indirect conversions when they acquire qualified
replacement property? - 2 years
If the primary residence has been owned for 2 years, how much may be excluded by a single tax payer
when selling the property? - Gain of $250,000
ANSWERS
Progressive Tax Rate - Rate that increases as the tax base increases
Proportional Tax Rate - Rate that is constant regardless of the size of the tax base
Regressive Tax Rate - Rate decreases as the tax base increases
Statutory Tax Rate - Rate specified in the law
Marginal Tax Rate - Rate applicable to the next dollar of income
Average Tax Rate - Equal to the tax liability divided by taxable income
Effective Tax Rate - Equal to the taxes paid divided by the taxpayers ability to pay
Gift Tax - Tax imposed on the transfer of property by gift
What is treated as a partnership? - LLC
Public Law 86-272 - Attempted to bring consistency to the multistate income tax process
Uniform Division of Income Tax Purposes Act (UDITPA) - States and localities interested in a
coherent set of income assignment rules and it forms the basis for the income tax statutes in most of the
MTC member states
Nexus Tax - Degree of activity that must be present before a taxing jurisdiction has the right to
impose a tax on an out of state entity
Tax Cuts and Jobs Act (TCJA) - Reduced federal corporate tax rates
Who allows a jury trial? - US District Court
Recognized Gain/Loss - Portion of realized gain or loss subject to income taxation
Capital Asset - Used for 1+ years and not available for sale; usually tangible
Short Term Gain/Loss - 1 year or less
What offsets the highest taxed gain first? - Short Term Losses
How should a gain on personal property when compensated by insurance proceed? - Deferred in
an involuntary conversion
When can tax payers defer realized gains on indirect conversions when they acquire qualified
replacement property? - 2 years
If the primary residence has been owned for 2 years, how much may be excluded by a single tax payer
when selling the property? - Gain of $250,000
