ACCT 3221 Income Tax Chapters
1-7 Test Bank PDF Q&A Latest
2026 Exam Prep| Sure Pass
83. Which, if any, of the following statements best
describes the history of the Federal income tax?
a. It did not exist during the Civil War.
b. The Federal income tax on corporations was held by
the U.S. Supreme Court to be allowable under the U.S.
Constitution.
c. The Federal income tax on individuals was held by the
U.S. Supreme Court to be allowable under the U.S.
Constitution.
d. Both the Federal income tax on individuals and on
corporations was held by the U.S. Supreme Court to be
contrary to the U.S. Constitution.
e. None of these.
Correct Answer: b
84. Which, if any, is not one of Adam Smith's canons of
taxation?
a. Economy
b. Certainty
c. Convenience
d. Simplicity
e. Equality
Correct Answer: d
85. Which, if any, of the following taxes are proportional
(rather than progressive)?
a. State general sales tax
b. Federal corporate income tax
c. Federal estate tax
1
,d. Federal gift tax
e. All of these
Correct Answer: a
86. Which, if any, of the following transactions will
increase a taxing jurisdiction's revenue from the ad
valorem tax imposed on real estate?
a. A resident dies and leaves his farm to his church.
b. A large property owner issues a conservation easement
as to some of her land.
c. A tax holiday issued 10 years ago has expired.
d. A bankrupt motel is acquired by the Red Cross and is to
be used to provide housing for homeless persons.
e. None of these.
Correct Answer: c
87. Which, if any, of the following transactions will
decrease a taxing jurisdiction's ad valorem tax revenue
imposed on real estate?
a. A tax holiday is granted to an out-of-state business that
is searching for a new factory site.
b. An abandoned church is converted to a restaurant.
c. A public school is razed and turned into a city park.
d. A local university sells a dormitory that will be converted
for use as an apartment building.
e. None of these.
Correct Answer: a
88. Which, if any, of the following is a typical characteristic
of an ad valorem tax on personalty?
a. Taxpayer compliance is greater for personal use
property than for business use property.
b. The tax on automobiles sometimes considers the age of
the vehicle.
c. Most states impose a tax on intangibles.
d. The tax on intangibles generates considerable revenue
since it is difficult for taxpayers to avoid.
2
,e. None of these.
Correct Answer: b
89. Federal excise taxes that are no longer imposed
include:
a. Tax on air travel.
b. Tax on wagering.
c. Tax on the manufacture of sporting equipment.
d. Tax on alcohol.
e. None of these.
Correct Answer: e
90. Taxes not imposed by the Federal government include:
a. Tobacco excise tax.
b. Customs duties (tariffs on imports).
c. Tax on rent cars.
d. Gas guzzler tax.
e. None of these.
Correct Answer: c
91. Taxes levied by both states and the Federal
government include:
a. General sales tax.
b. Custom duties.
c. Hotel occupancy tax.
d. Franchise tax.
e. None of these.
Correct Answer: e
92. Taxes levied by all states include:
a. Tobacco excise tax.
b. Individual income tax.
c. Inheritance tax.
d. General sales tax.
e. None of these.
Correct Answer: a
3
, 93. A use tax is imposed by:
a. The Federal government and all states.
b. The Federal government and a majority of the states.
c. All states and not the Federal government.
d. Most of the states and not the Federal government.
e. None of these.
Correct Answer: d
94. Burt and Lisa are married and live in a common law
state. Burt wants to make gifts to their four children in
2014. What is the maximum amount of the annual
exclusion they will be allowed for these gifts?
a. $14,000.
b. $28,000.
c. $56,000.
d. $112,000.
e. None of these.
Correct Answer: d
95. Property can be transferred within the family group by
gift or at death. One motivation for preferring the gift
approach is:
a. To take advantage of the higher unified transfer tax
credit available under the gift tax.
b. To avoid a future decline in value of the property
transferred.
c. To take advantage of the per donee annual exclusion.
d. To shift income to higher bracket donees.
e. None of these.
Correct Answer: c
96. Indicate which, if any, statement is incorrect. State
income taxes:
a. Can piggyback to the Federal version.
b. Cannot apply to visiting nonresidents.
c. Can decouple from the Federal version.
d. Can provide occasional amnesty programs.
4
1-7 Test Bank PDF Q&A Latest
2026 Exam Prep| Sure Pass
83. Which, if any, of the following statements best
describes the history of the Federal income tax?
a. It did not exist during the Civil War.
b. The Federal income tax on corporations was held by
the U.S. Supreme Court to be allowable under the U.S.
Constitution.
c. The Federal income tax on individuals was held by the
U.S. Supreme Court to be allowable under the U.S.
Constitution.
d. Both the Federal income tax on individuals and on
corporations was held by the U.S. Supreme Court to be
contrary to the U.S. Constitution.
e. None of these.
Correct Answer: b
84. Which, if any, is not one of Adam Smith's canons of
taxation?
a. Economy
b. Certainty
c. Convenience
d. Simplicity
e. Equality
Correct Answer: d
85. Which, if any, of the following taxes are proportional
(rather than progressive)?
a. State general sales tax
b. Federal corporate income tax
c. Federal estate tax
1
,d. Federal gift tax
e. All of these
Correct Answer: a
86. Which, if any, of the following transactions will
increase a taxing jurisdiction's revenue from the ad
valorem tax imposed on real estate?
a. A resident dies and leaves his farm to his church.
b. A large property owner issues a conservation easement
as to some of her land.
c. A tax holiday issued 10 years ago has expired.
d. A bankrupt motel is acquired by the Red Cross and is to
be used to provide housing for homeless persons.
e. None of these.
Correct Answer: c
87. Which, if any, of the following transactions will
decrease a taxing jurisdiction's ad valorem tax revenue
imposed on real estate?
a. A tax holiday is granted to an out-of-state business that
is searching for a new factory site.
b. An abandoned church is converted to a restaurant.
c. A public school is razed and turned into a city park.
d. A local university sells a dormitory that will be converted
for use as an apartment building.
e. None of these.
Correct Answer: a
88. Which, if any, of the following is a typical characteristic
of an ad valorem tax on personalty?
a. Taxpayer compliance is greater for personal use
property than for business use property.
b. The tax on automobiles sometimes considers the age of
the vehicle.
c. Most states impose a tax on intangibles.
d. The tax on intangibles generates considerable revenue
since it is difficult for taxpayers to avoid.
2
,e. None of these.
Correct Answer: b
89. Federal excise taxes that are no longer imposed
include:
a. Tax on air travel.
b. Tax on wagering.
c. Tax on the manufacture of sporting equipment.
d. Tax on alcohol.
e. None of these.
Correct Answer: e
90. Taxes not imposed by the Federal government include:
a. Tobacco excise tax.
b. Customs duties (tariffs on imports).
c. Tax on rent cars.
d. Gas guzzler tax.
e. None of these.
Correct Answer: c
91. Taxes levied by both states and the Federal
government include:
a. General sales tax.
b. Custom duties.
c. Hotel occupancy tax.
d. Franchise tax.
e. None of these.
Correct Answer: e
92. Taxes levied by all states include:
a. Tobacco excise tax.
b. Individual income tax.
c. Inheritance tax.
d. General sales tax.
e. None of these.
Correct Answer: a
3
, 93. A use tax is imposed by:
a. The Federal government and all states.
b. The Federal government and a majority of the states.
c. All states and not the Federal government.
d. Most of the states and not the Federal government.
e. None of these.
Correct Answer: d
94. Burt and Lisa are married and live in a common law
state. Burt wants to make gifts to their four children in
2014. What is the maximum amount of the annual
exclusion they will be allowed for these gifts?
a. $14,000.
b. $28,000.
c. $56,000.
d. $112,000.
e. None of these.
Correct Answer: d
95. Property can be transferred within the family group by
gift or at death. One motivation for preferring the gift
approach is:
a. To take advantage of the higher unified transfer tax
credit available under the gift tax.
b. To avoid a future decline in value of the property
transferred.
c. To take advantage of the per donee annual exclusion.
d. To shift income to higher bracket donees.
e. None of these.
Correct Answer: c
96. Indicate which, if any, statement is incorrect. State
income taxes:
a. Can piggyback to the Federal version.
b. Cannot apply to visiting nonresidents.
c. Can decouple from the Federal version.
d. Can provide occasional amnesty programs.
4
