All Chapters Test Bank LATEST UPDATE 2025/2026,A+ Quarantee Pass 100%

1. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on individuals. *a. True b. False 2. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals. a. True *b. False 3. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%. *a. True b. False 4. The Federal income tax on corporations generates more revenue than the Federal income tax on individuals. a. True *b. False 5. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon of convenience. *a. True b. False 6. Although the law is complicated, most individual taxpayers are able to complete their Federal income tax returns without outside assistance. a. True *b. False 7. The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase. a. True *b. False 8. The Federal estate and gift taxes are examples of progressive taxes. *a. True b. False 9. The Federal excise tax on cigarettes is an example of a proportional tax. *a. True b. False 10. Currently, the Federal income tax is more progressive than it ever has been in the past. a. True *b. False 11. Mona inherits her mother’s personal residence, which she converts to a furnished rent house. These changes should affect the amount of ad valorem property taxes levied on the properties. *a. True b. False 12. A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty. a. True *b. False 13. Even if property tax rates are not changed, the ad valorem taxes imposed on realty may not remain the same. *a. True b. False 14. The ad valorem tax on business use personalty is more often avoided by taxpayers than the ad valorem tax on personal use personalty. a. True *b. False 15. Federal excise tax is no longer imposed on cosmetics. *a. True b. False 16. The tax on hotel occupancy is subject to both Federal and state excise taxes. a. True *b. False 17. The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S. a. True *b. False 18. Like the Federal counterpart, the amount of the state excise taxes on gasoline do not vary from state to state. a. True *b. False 19. The states that impose a general sales tax also have a use tax. *a. True b. False 20. Sales made by mail order are not exempt from the application of a general sales (or use) tax. *a. True b. False 21. Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate. *a. True b. False 22. States impose either a state income tax or a general sales tax, but not both types of taxes. a. True *b. False 23. A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes. a. True *b. False 24. On transfers by death, the Federal government relies on an estate tax, while states use only an inheritance tax. a. True *b. False 25. An inheritance tax is a tax on a decedent’s right to pass property at death. a. True *b. False 26. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit. *a. True b. False 27. CHAPTER 1 AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE27 Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint’s death in 2011. *a. True b. False 28. CHAPTER 1AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE28 Under a state inheritance tax, two heirs, a cousin and a son of the deceased, would be taxed at the same rate. a. True *b. False 29. CHAPTER 1AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE29 The annual exclusion, currently $13,000, is available for gift but not estate tax purposes. *a. True b. False 30. CHAPTER 1AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE30 In 2011, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has made a taxable gift of $37,000. *a. True b. False 31. CHAPTER 1AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE31 Julius, a married taxpayer, makes gifts to each of his six children. A maximum of six annual exclusions could be allowed as to these gifts. a. True *b. False 32. CHAPTER 1AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FE32 One of the motivations for making a gift is to save on income taxes. *a. True b. False