Test Bank for Principles of Taxation for Business and Investment Planning 2026 (2025 Release) By Sally Jones, Shelley Rhoades-Catanach

Test Bank For Principles of Taxation
for Business and Investment
Planning 2026 (2025 Release) By
Sally Jones, Shelley Rhoades-
Catanach (All Chapters 1-18, 100%
Original Verified, A+ Grade)
All Chapters Arranged Reverse: 18-1
This is the Only Original and
Complete Test Bank for 2026 Edition
(2025 Release), All Other Files in
The Market are Fake/Old/Wrong
Edition.
Test Bank Answers at The End of
Each Chapter.

,Chapter 18


Student name:__________
1) Employees who deliberately have excess income tax withheld from their salaries in order to
receive a tax refund are making an interest-free loan of the excess withholding to the
government.
⊚ true
⊚ false



2) An individual taxpayer is not required to give the IRS an explanation for extending the filing
date for Form 1040.
⊚ true
⊚ false



3) Taxpayers who cannot complete their tax return by the filing date can request an extension of
time to pay any tax due for the year.
⊚ true
⊚ false



4) Both individual and corporate taxpayers must pay any balance due of their tax by the
extended due date of the tax return for the year.
⊚ true
⊚ false



5) Gretchen's 2024 tax return, due April 15, 2025, was filed on July 9, 2025. The tax due with
this return was $1,200. Gretchen owes a late filing penalty of $180.
⊚ true
⊚ false



6) The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the
accuracy of the taxpayer's return.
⊚ true
⊚ false




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,Chapter 18


7) Taxpayers should keep all supporting documentation (credit card statements, etc.) for a tax
return for at least three years after the return is filed.
⊚ true
⊚ false



8) The statute of limitations for a tax return does not begin to run until the return is filed.
⊚ true
⊚ false



9) Manuel filed a 2024 tax return on its extended due date of October 15, 2025. The IRS has
until December 31, 2027, to audit this return.
⊚ true
⊚ false



10) The IRS selects returns to audit that have the highest probability of generating additional
revenue.
⊚ true
⊚ false



11) Corporations are allowed to deduct interest paid on an income tax deficiency as a business
expense.
⊚ true
⊚ false



12) Individuals are allowed to deduct interest paid on an income tax deficiency as an itemized
deduction.
⊚ true
⊚ false



13) The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a
tax deficiency.
⊚ true
⊚ false




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, Chapter 18


14) According to the Taxpayer Bill of Rights, a taxpayer has the right to both privacy and
confidentiality during the course of an IRS audit.
⊚ true
⊚ false



15) An individual who didn't graduate from high school has less exposure to a negligence penalty
from the IRS than a college graduate.
⊚ true
⊚ false



16) This year, Mrs. Chavez underpaid federal income by $11,017. If the entire underpayment was
attributable to Mrs. Chavez's failure to make a good faith effort to comply with the tax law,
the IRS may impose a $2,754 negligence penalty.
⊚ true
⊚ false



17) The IRS can't impose an accuracy-related penalty on an individual who relied on the advice
of a CPA in preparing the tax return.
⊚ true
⊚ false



18) The harshest administrative penalty that the IRS can impose is the civil fraud penalty.
⊚ true
⊚ false



19) A special agent is assigned to a tax investigation to determine if the government has enough
evidence to indict the taxpayer for criminal fraud.
⊚ true
⊚ false



20) Only attorneys, enrolled agents, and CPAs may prepare tax returns for compensation.
⊚ true
⊚ false




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