TEST BANK
SOUTH-WESTERN FEDERAL TAXATION
2025:
INDIVIDUAL INCOME TAXES, 48TH
EDITION
BY YOUNG COMPLETE CHAPTERS 1 - 20
Page 1
,TABLE OF CONTENTS
Chapter 1: An Introduction to Taxation and Understanding the Federal
Tax Law
Chapter 2: Working with the Tax Law
Chapter 03: Tax Formula and Tax Determination
Chapter 04: Gross Income: Concepts and Inclusions
Chapter 05: Gross Income: Exclusions
Chapter 06: Deductions and Losses: In General
Chapter 07: Deductions and Losses: Certain Business Expenses
Chapter 08: Depreciation, Cost Recovery, Amortization, and Depletion
Chapter 09: Deductions: Employee and Self-Employed-Related
Expense
Chapter 10: Deductions and Losses: Certain Itemized Deductions
Chapter 11: Investor Losses
Chapter 12: Alternative Minimum Tax
Chapter 13: Tax Credits and Payment Procedures
Chapter 14: Property Transactions: Determination of Gain or Loss and
Chapter 15: Property Transactions: Nontaxable Exchanges
Chapter 16: Property Transactions: Capital Gains and Losses
Chapter 17: Property Transactions: 1231 and Recapture Provisions
Chapter 18: Accounting Periods and Methods
Chapter 19: Deferred Compensation
Chapter 20: Corporations and Partnerships
Page 2
, Chapter 01 2025 Individuals
Answers at the end of each
chapter
Indicate whether the statement is true
or false.
1. Sales made over the internet are not exempt from the application of a general sales (or use)
tax.
a. True
b. False
2. 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
3. Ultimately, most taxes are paid by individuals.
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on
realty may not remainthe same.
a. True
b. False
5. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
6. If more IRS audits are producing a higher number of no change results, this indicates
increased compliance onthe part of taxpayers.
a. True
b. False
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the
purchase in a state thatlevies no such taxes.
a. True
b. False
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The
return reflects an overpayment of $6,000, and the taxpayer requests a refund of this
amount. The refund is paid on May 16, 2024.The refund need not include interest.
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut
Page 3
, Name: Class: Date:
Chapter 01 2025 Individuals
temporary.
a. True
b. False
Name: Class: Date:
Chapter 01 2025 Individuals
10. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
11. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both
foreign and U.S. income taxes on the same income is allowed either a deduction or a
credit for the foreign tax paid.
a. True
b. False
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller
to recognize a gain inthe year the installment sale occurs.
a. True
b. False
13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by
the IRS.
a. True
b. False
14. 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
15. 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
16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed
the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new
warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
a. True
b. False
Page 4
SOUTH-WESTERN FEDERAL TAXATION
2025:
INDIVIDUAL INCOME TAXES, 48TH
EDITION
BY YOUNG COMPLETE CHAPTERS 1 - 20
Page 1
,TABLE OF CONTENTS
Chapter 1: An Introduction to Taxation and Understanding the Federal
Tax Law
Chapter 2: Working with the Tax Law
Chapter 03: Tax Formula and Tax Determination
Chapter 04: Gross Income: Concepts and Inclusions
Chapter 05: Gross Income: Exclusions
Chapter 06: Deductions and Losses: In General
Chapter 07: Deductions and Losses: Certain Business Expenses
Chapter 08: Depreciation, Cost Recovery, Amortization, and Depletion
Chapter 09: Deductions: Employee and Self-Employed-Related
Expense
Chapter 10: Deductions and Losses: Certain Itemized Deductions
Chapter 11: Investor Losses
Chapter 12: Alternative Minimum Tax
Chapter 13: Tax Credits and Payment Procedures
Chapter 14: Property Transactions: Determination of Gain or Loss and
Chapter 15: Property Transactions: Nontaxable Exchanges
Chapter 16: Property Transactions: Capital Gains and Losses
Chapter 17: Property Transactions: 1231 and Recapture Provisions
Chapter 18: Accounting Periods and Methods
Chapter 19: Deferred Compensation
Chapter 20: Corporations and Partnerships
Page 2
, Chapter 01 2025 Individuals
Answers at the end of each
chapter
Indicate whether the statement is true
or false.
1. Sales made over the internet are not exempt from the application of a general sales (or use)
tax.
a. True
b. False
2. 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
3. Ultimately, most taxes are paid by individuals.
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on
realty may not remainthe same.
a. True
b. False
5. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
6. If more IRS audits are producing a higher number of no change results, this indicates
increased compliance onthe part of taxpayers.
a. True
b. False
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the
purchase in a state thatlevies no such taxes.
a. True
b. False
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The
return reflects an overpayment of $6,000, and the taxpayer requests a refund of this
amount. The refund is paid on May 16, 2024.The refund need not include interest.
a. True
b. False
9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut
Page 3
, Name: Class: Date:
Chapter 01 2025 Individuals
temporary.
a. True
b. False
Name: Class: Date:
Chapter 01 2025 Individuals
10. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
11. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both
foreign and U.S. income taxes on the same income is allowed either a deduction or a
credit for the foreign tax paid.
a. True
b. False
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller
to recognize a gain inthe year the installment sale occurs.
a. True
b. False
13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by
the IRS.
a. True
b. False
14. 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
15. 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
16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
b. False
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed
the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new
warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
a. True
b. False
Page 4
