TEST BANKb
South-Western Federal Taxation 2025:
b b b
Individual Income Taxes, 48th Edition by
b b b b b b
James Young Complete Chapters 1 - 20
b b b b b b
Pageb1
,TABLEOF CONTENTS b
Chapter 1: An Introduction to Taxation and Understanding the Federal Tax Law Chapter
b b b b b b b b b b b b b
2: Working with the Tax Law
b b b b b
Chapter 03: Tax Formula and Tax Determination Chapter
b b 2 b b b b b
04: Gross Income: Concepts and Inclusions Chapter 05:
b b b b b b b b
Gross Income: Exclusions
b b
Chapter 06: Deductions and Losses: In General
b b b b b b
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter
b b b b b b b b b
08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09:
b b b b b b b b b
Deductions: Employee and Self-Employed- b b b
Related Expense Chapter 10: Deductions and Losses: Certain Itemized De
b b b b b b b b b
ductions Chapter 11: Investor Losses
b b b b
Chapter 12: Alternative Minimum Tax
b b b b
Chapter 13: Tax Credits and Payment Procedures
b b 2 b b 2
Chapter 14: Property Transactions: Determination of Gain or Loss and Cha
b b b b b b b b b b
pter 15: Property Transactions: Nontaxable Exchanges
b b b b b
Chapter 16: Property Transactions: Capital Gains and Losses Chapte
b b b b b b b b
r 17: Property Transactions: 1231 and Recapture Provisions Chapter
b b b b b b b b b
18: Accounting Periods and Methods
b b b b
Chapter 19: Deferred Compensation Chapter
b b b b
20: Corporations and Partnerships
b b b b
Pageb2
, Chapterb01b20252bIndividuals
Answers2at2the2end2of2each2chapter
Indicatebwhetherbthebstatementbis2btrueborbfalse.
b1.bSalesbmadeboverbthebinternetbarebnot2exempt2frombthebapplicationbofbabgeneralbsalesb(orbuse)btax.
a. True
b. False
b2.bUponbauditbbybthebIRS,bFaithbisbassessedbabdeficiencybofb$40,000bofbwhichb$25,000bisbattributablebtobnegligence.
The220%bnegligencebpenaltybwillbapplybtob$25,000.
a. True
b. False
3.bUltimately,bmostbtaxesbarebpaidbbybindividuals.
b
a. True
b. False
b4.bEvenbifbpropertybtaxbratesbarebnot2changed,bthebamountbofbadbvalorem2taxesbimposedbonbrealtybmaybnotbremainthebsame.
a. True
b. False
b5.bThebprincipalbobjectivebofbthebFUTA2tax2isbtobprovidebsomebmeasurebofbretirementbsecurity.
a. True
b. False
6.bIfbmorebIRSbauditsbarebproducingbabhigherbnumberbofbnobchangebresults,bthisbindicatesbincreasedbcompliancebonthe2b
b
partbofbtaxpayers.
a. True
b. False
b7.bAbsafe2andbeasybwaybforbabtaxpayerbtobavoidblocalbandbstatebsalesbtaxesbisbtobmakebthebpurchasebinbabstate2thatlevbies
nobsuchbtaxes.
b
a. True
b. False
8.bA2calendarbyearbtaxpayerbfilesbhisb2023bFederalbincomebtaxbreturnbonbMarchb4,b2024.bThebreturnbreflects2anboverpaybm
b
ent2ofb$6,000,bandbthebtaxpayerbrequestsbabrefundbofbthisbamount.bThebrefundbisbpaidbonbMayb16,b2024.Thebrefundbneedbnot2b in
cludebinterest.
a. True
b. False
b9.bAbtax2cutbenactedbbybCongressbthatbcontainsbab sunsetbprovisionbwillbmake2thebtaxbcutbtemporary.
a. True
b. False
Pageb3
, Name: Class: Date:b
Chapterb01b2025bIndividuals
10.bForbFederalbincomebtax2purposes,btherebneverbhasbbeenbabgeneralbamnestybperiod.
b
a. True
b. False
b11.bToblessenborbeliminatebthebeffectbofbmultiplebtaxation,babtaxpayerbwho2isbsubject2tobbothbforeignbandbU.S.bincomebtaxeb
sbonbthe2samebincomebisballowedbeitherbabdeductionborbabcredit2forbthebforeignbtaxbpaid.
a. True
b. False
12.bBecausebit2isbconsistentbwithbthebwherewithalbtobpaybconcept,bthebtaxblawbrequiresbabsellerbtobrecognizebabgainbintheb
b
yearbthebinstallmentbsaleboccurs.
a. True
b. False
13.bThe2amountbofbabtaxpayer’s2itemizedbdeductionsbwillbincreasebthebchance2ofbbeingbauditedbbybthebIRS.
b
a. True
b. False
14.bInb2024,bJosé,babwidower,bsellsblandb(fairbmarketbvaluebofb$100,000)btobhisbdaughter,bLinda,bforb$50,000.bJosébhas2not2b
b
madebabtaxablebgift.
a. True
b. False
b15.bForbomissionsbfrombgrossbincomebinbexcessbofb25%bofbthat2reported,btherebisbno2statutebofblimitationsbonbadb
ditionalbincomebtaxbassessmentsbbybthebIRS.
a. True
b. False
16.bStealthbtaxesbhave2thebeffect2ofbgeneratingbadditionalbtaxesbfromballbtaxpayers.
b
a. True
b. False
17.bJason’sbbusinessbwarehousebisbdestroyedbbybfire.bBecausebthebinsurancebproceedsbexceedbthebbasisbofbthebpropertb
bb
y,babgainbresults.bIfbJasonbshortlybreinvestsbthebproceedsbinbabnewbwarehouse,bno2gainbisbrecognizedbdue2tobthebapplicationbofbtbh
ebwherewithalbto2paybconcept.
a. True
b. False
18.bAnbinheritance2taxbisbabtax2onbabdecedent’sbrightbto2passbpropertybatbdeath.
b
a. True
b. False
19.bWhenbinterest2isbchargedbonbabdeficiency,banybpart2ofbabmonthbcountsbas2abfullbmonth.
b
a. True
b. False
Pageb4
South-Western Federal Taxation 2025:
b b b
Individual Income Taxes, 48th Edition by
b b b b b b
James Young Complete Chapters 1 - 20
b b b b b b
Pageb1
,TABLEOF CONTENTS b
Chapter 1: An Introduction to Taxation and Understanding the Federal Tax Law Chapter
b b b b b b b b b b b b b
2: Working with the Tax Law
b b b b b
Chapter 03: Tax Formula and Tax Determination Chapter
b b 2 b b b b b
04: Gross Income: Concepts and Inclusions Chapter 05:
b b b b b b b b
Gross Income: Exclusions
b b
Chapter 06: Deductions and Losses: In General
b b b b b b
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter
b b b b b b b b b
08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09:
b b b b b b b b b
Deductions: Employee and Self-Employed- b b b
Related Expense Chapter 10: Deductions and Losses: Certain Itemized De
b b b b b b b b b
ductions Chapter 11: Investor Losses
b b b b
Chapter 12: Alternative Minimum Tax
b b b b
Chapter 13: Tax Credits and Payment Procedures
b b 2 b b 2
Chapter 14: Property Transactions: Determination of Gain or Loss and Cha
b b b b b b b b b b
pter 15: Property Transactions: Nontaxable Exchanges
b b b b b
Chapter 16: Property Transactions: Capital Gains and Losses Chapte
b b b b b b b b
r 17: Property Transactions: 1231 and Recapture Provisions Chapter
b b b b b b b b b
18: Accounting Periods and Methods
b b b b
Chapter 19: Deferred Compensation Chapter
b b b b
20: Corporations and Partnerships
b b b b
Pageb2
, Chapterb01b20252bIndividuals
Answers2at2the2end2of2each2chapter
Indicatebwhetherbthebstatementbis2btrueborbfalse.
b1.bSalesbmadeboverbthebinternetbarebnot2exempt2frombthebapplicationbofbabgeneralbsalesb(orbuse)btax.
a. True
b. False
b2.bUponbauditbbybthebIRS,bFaithbisbassessedbabdeficiencybofb$40,000bofbwhichb$25,000bisbattributablebtobnegligence.
The220%bnegligencebpenaltybwillbapplybtob$25,000.
a. True
b. False
3.bUltimately,bmostbtaxesbarebpaidbbybindividuals.
b
a. True
b. False
b4.bEvenbifbpropertybtaxbratesbarebnot2changed,bthebamountbofbadbvalorem2taxesbimposedbonbrealtybmaybnotbremainthebsame.
a. True
b. False
b5.bThebprincipalbobjectivebofbthebFUTA2tax2isbtobprovidebsomebmeasurebofbretirementbsecurity.
a. True
b. False
6.bIfbmorebIRSbauditsbarebproducingbabhigherbnumberbofbnobchangebresults,bthisbindicatesbincreasedbcompliancebonthe2b
b
partbofbtaxpayers.
a. True
b. False
b7.bAbsafe2andbeasybwaybforbabtaxpayerbtobavoidblocalbandbstatebsalesbtaxesbisbtobmakebthebpurchasebinbabstate2thatlevbies
nobsuchbtaxes.
b
a. True
b. False
8.bA2calendarbyearbtaxpayerbfilesbhisb2023bFederalbincomebtaxbreturnbonbMarchb4,b2024.bThebreturnbreflects2anboverpaybm
b
ent2ofb$6,000,bandbthebtaxpayerbrequestsbabrefundbofbthisbamount.bThebrefundbisbpaidbonbMayb16,b2024.Thebrefundbneedbnot2b in
cludebinterest.
a. True
b. False
b9.bAbtax2cutbenactedbbybCongressbthatbcontainsbab sunsetbprovisionbwillbmake2thebtaxbcutbtemporary.
a. True
b. False
Pageb3
, Name: Class: Date:b
Chapterb01b2025bIndividuals
10.bForbFederalbincomebtax2purposes,btherebneverbhasbbeenbabgeneralbamnestybperiod.
b
a. True
b. False
b11.bToblessenborbeliminatebthebeffectbofbmultiplebtaxation,babtaxpayerbwho2isbsubject2tobbothbforeignbandbU.S.bincomebtaxeb
sbonbthe2samebincomebisballowedbeitherbabdeductionborbabcredit2forbthebforeignbtaxbpaid.
a. True
b. False
12.bBecausebit2isbconsistentbwithbthebwherewithalbtobpaybconcept,bthebtaxblawbrequiresbabsellerbtobrecognizebabgainbintheb
b
yearbthebinstallmentbsaleboccurs.
a. True
b. False
13.bThe2amountbofbabtaxpayer’s2itemizedbdeductionsbwillbincreasebthebchance2ofbbeingbauditedbbybthebIRS.
b
a. True
b. False
14.bInb2024,bJosé,babwidower,bsellsblandb(fairbmarketbvaluebofb$100,000)btobhisbdaughter,bLinda,bforb$50,000.bJosébhas2not2b
b
madebabtaxablebgift.
a. True
b. False
b15.bForbomissionsbfrombgrossbincomebinbexcessbofb25%bofbthat2reported,btherebisbno2statutebofblimitationsbonbadb
ditionalbincomebtaxbassessmentsbbybthebIRS.
a. True
b. False
16.bStealthbtaxesbhave2thebeffect2ofbgeneratingbadditionalbtaxesbfromballbtaxpayers.
b
a. True
b. False
17.bJason’sbbusinessbwarehousebisbdestroyedbbybfire.bBecausebthebinsurancebproceedsbexceedbthebbasisbofbthebpropertb
bb
y,babgainbresults.bIfbJasonbshortlybreinvestsbthebproceedsbinbabnewbwarehouse,bno2gainbisbrecognizedbdue2tobthebapplicationbofbtbh
ebwherewithalbto2paybconcept.
a. True
b. False
18.bAnbinheritance2taxbisbabtax2onbabdecedent’sbrightbto2passbpropertybatbdeath.
b
a. True
b. False
19.bWhenbinterest2isbchargedbonbabdeficiency,banybpart2ofbabmonthbcountsbas2abfullbmonth.
b
a. True
b. False
Pageb4
