TEST BANKzx
South-Western Federal Taxation 2025:
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Individual Income Taxes, 48th Edition
zx zx zx zx
by James Young Complete Chapters 1 - 20
zx zx zxzx zx zx zx zx
Pagezx1
,TABLE OF CONTENTS
zx zx zx
Chapter 1: An Introduction to Taxation and Understanding the Federal Tax Law
zx zx zx zx zx zx zx zx zx zx zx zx
Chapter 2: Working with the Tax Law
zx zx zx zx zx zx zx
Chapter 03: Tax Formula and Tax Determination
zx zx zx zx zx zx zx
Chapter 04: Gross Income: Concepts and Inclusions
zx zx zx zx zx zx zx
Chapter 05: Gross Income: Exclusions
zx zx zx zx zx
Chapter 06: Deductions and Losses: In General
zx zx zx zx zx zx zx
Chapter 07: Deductions and Losses: Certain Business Expenses
zx zx zx zx zx zx zx zx
Chapter 08: Depreciation, Cost Recovery, Amortization, and Depletion
zx zx zx zx zx zx zx zx
Chapter 09: Deductions: Employee and Self-Employed-Related Expense
zx zx zx zx zx zx zx
Chapter 10: Deductions and Losses: Certain Itemized Deductions
zx zx zx zx zx zx zx zx
Chapter 11: Investor Losses
zx zx zx zx
Chapter 12: Alternative Minimum Tax
zx zx zx zx zx
Chapter 13: Tax Credits and Payment Procedures
zx zx zx zx zx zx zx
Chapter 14: Property Transactions: Determination of Gain or Loss and
zx zx zx zx zx zx zx zx zx zx
Chapter 15: Property Transactions: Nontaxable Exchanges
zx zx zx zx zx zx
Chapter 16: Property Transactions: Capital Gains and Losses
zx zx zx zx zx zx zx zx
Chapter 17: Property Transactions: 1231 and Recapture Provisions
zx zx zx zx zx zx zx zx
Chapter 18: Accounting Periods and Methods
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Chapter 19: Deferred Compensation
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Chapter 20: Corporations and Partnerships
zx zx zx zx
Pagezx2
, Chapter 01 2025 Individuals
zx zx zx
Answers at the end of each chapter
zx zx zx zx zx zx
Indicate whether the statement is true or false.
zx zx zx zx zx zx zx
zx zx 1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx zx 2. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
The 20% negligence penalty will apply to $25,000.
zx zx zx zx zx zx zx
a. True
b. False
zx zx 3. Ultimately, most taxes are paid by individuals.
zx zx zx zx zx zx zx
a. True
b. False
zx
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remai
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe same.
zx zx
a. True
b. False
zx zx 5. The principal objective of the FUTA tax is to provide some measure of retirement security.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
6. If more IRS audits are producing a higher number of no change results, this indicates increased compliance o
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe part of taxpayers.
zx zx zx zx
a. True
b. False
zx
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
thatlevies no such taxes.
zx zx zx zx zx
a. True
b. False
zx
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an ov
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
erpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx z
need not include interest.
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a. True
b. False
zx zx 9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
Pagezx3
, Name: Class: Date:zx
Chapter 01 2025 Individuals
zx zx zx
zx zx 10. For Federal income tax purposes, there never has been a general amnesty period.
zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
11. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income t
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
axes on the same income is allowed either a deduction or a credit for the foreign tax paid.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain i
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe year the installment sale occurs.
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a. True
b. False
zx zx 13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
not made a taxable gift.
zx zx zx zx
a. True
b. False
zx
15. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx z
additional income tax assessments by the IRS.
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a. True
b. False
zx zx 16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the pr
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
operty, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the appli
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
cation of the wherewithal to pay concept.
zx zx zx zx zx zx
a. True
b. False
zx zx 18. An inheritance tax is a tax on a decedent’s right to pass property at death.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx zx 19. When interest is charged on a deficiency, any part of a month counts as a full month.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
Pagezx4
South-Western Federal Taxation 2025:
zx zx zx
Individual Income Taxes, 48th Edition
zx zx zx zx
by James Young Complete Chapters 1 - 20
zx zx zxzx zx zx zx zx
Pagezx1
,TABLE OF CONTENTS
zx zx zx
Chapter 1: An Introduction to Taxation and Understanding the Federal Tax Law
zx zx zx zx zx zx zx zx zx zx zx zx
Chapter 2: Working with the Tax Law
zx zx zx zx zx zx zx
Chapter 03: Tax Formula and Tax Determination
zx zx zx zx zx zx zx
Chapter 04: Gross Income: Concepts and Inclusions
zx zx zx zx zx zx zx
Chapter 05: Gross Income: Exclusions
zx zx zx zx zx
Chapter 06: Deductions and Losses: In General
zx zx zx zx zx zx zx
Chapter 07: Deductions and Losses: Certain Business Expenses
zx zx zx zx zx zx zx zx
Chapter 08: Depreciation, Cost Recovery, Amortization, and Depletion
zx zx zx zx zx zx zx zx
Chapter 09: Deductions: Employee and Self-Employed-Related Expense
zx zx zx zx zx zx zx
Chapter 10: Deductions and Losses: Certain Itemized Deductions
zx zx zx zx zx zx zx zx
Chapter 11: Investor Losses
zx zx zx zx
Chapter 12: Alternative Minimum Tax
zx zx zx zx zx
Chapter 13: Tax Credits and Payment Procedures
zx zx zx zx zx zx zx
Chapter 14: Property Transactions: Determination of Gain or Loss and
zx zx zx zx zx zx zx zx zx zx
Chapter 15: Property Transactions: Nontaxable Exchanges
zx zx zx zx zx zx
Chapter 16: Property Transactions: Capital Gains and Losses
zx zx zx zx zx zx zx zx
Chapter 17: Property Transactions: 1231 and Recapture Provisions
zx zx zx zx zx zx zx zx
Chapter 18: Accounting Periods and Methods
zx zx zx zx zx zx
Chapter 19: Deferred Compensation
zx zx zx zx
Chapter 20: Corporations and Partnerships
zx zx zx zx
Pagezx2
, Chapter 01 2025 Individuals
zx zx zx
Answers at the end of each chapter
zx zx zx zx zx zx
Indicate whether the statement is true or false.
zx zx zx zx zx zx zx
zx zx 1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx zx 2. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
The 20% negligence penalty will apply to $25,000.
zx zx zx zx zx zx zx
a. True
b. False
zx zx 3. Ultimately, most taxes are paid by individuals.
zx zx zx zx zx zx zx
a. True
b. False
zx
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remai
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe same.
zx zx
a. True
b. False
zx zx 5. The principal objective of the FUTA tax is to provide some measure of retirement security.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
6. If more IRS audits are producing a higher number of no change results, this indicates increased compliance o
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe part of taxpayers.
zx zx zx zx
a. True
b. False
zx
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
thatlevies no such taxes.
zx zx zx zx zx
a. True
b. False
zx
8. A calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an ov
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
erpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx z
need not include interest.
x zx zx zx
a. True
b. False
zx zx 9. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
Pagezx3
, Name: Class: Date:zx
Chapter 01 2025 Individuals
zx zx zx
zx zx 10. For Federal income tax purposes, there never has been a general amnesty period.
zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
11. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income t
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
axes on the same income is allowed either a deduction or a credit for the foreign tax paid.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain i
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
nthe year the installment sale occurs.
zx zx zx zx zx zx
a. True
b. False
zx zx 13. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
not made a taxable gift.
zx zx zx zx
a. True
b. False
zx
15. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx z
additional income tax assessments by the IRS.
x zx zx zx zx zx zx
a. True
b. False
zx zx 16. Stealth taxes have the effect of generating additional taxes from all taxpayers.
zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the pr
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
operty, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the appli
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
cation of the wherewithal to pay concept.
zx zx zx zx zx zx
a. True
b. False
zx zx 18. An inheritance tax is a tax on a decedent’s right to pass property at death.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
zx zx 19. When interest is charged on a deficiency, any part of a month counts as a full month.
zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx zx
a. True
b. False
Pagezx4
