TESTBANK FOR SOUTH WESTERN FEDERAL TAXATION 2024 47th EDITION COMPREHENSIVE BY PERSELLIN NELLEN ALL CHAPTERS INCLUDED 2023/2024.

TESTBANK FOR SOUTH WESTERN FEDERAL TAXATION 2024 47th EDITION COMPREHENSIVE BY PERSELLIN NELLEN ALL CHAPTERS INCLUDED 2023/2024. Test bank Income Tax CHAPTER 1: AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAW 1. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations. a. True b. False ANSWER: False RATIONALE: The Sixteenth Amendment validated only the tax on individuals. The income tax on corporations had been previously sanctioned by the courts. 2. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals. a. True b. False ANSWER: False RATIONALE: There existed a Federal income tax during the Civil War that was sanctioned by the U.S. Supreme Court. 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 ANSWER: True 4. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations. 1 a. True b. False ANSWER: True 5. The payasyougo feature of the Federal income tax on individuals conforms to Adam Smith’s canon of certainty. a. True b. False ANSWER: False RATIONALE: Pay-as-you-go refers to the withholding provisions applicable to wages and other types of income and adds convenience to the tax system. 6. Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance. a. True b. False ANSWER: True RATIONALE: Approximately 60% use tax return preparers, while slightly more than 32% purchase tax return software. 7. The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase. a. True b. False ANSWER: False RATIONALE: The FICA tax (Medicare component) is proportional because the rate is constant regardless of the wages earned. 2 8. The Federal estate and gift taxes are examples of progressive taxes. a. True b. False ANSWER: True 9. The Federal excise tax on cigarettes is an example of a proportional tax. a. True b. False ANSWER: True RATIONALE: The tax is a flat $1.01 per pack. 10. Currently, the Federal income tax is less progressive than it ever has been in the past. a. True b. False ANSWER: False RATIONALE: Currently, the Federal income tax has six rates. At one time, it had two rates. 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 ANSWER: True RATIONALE: Conversion from residential to rental use will increase the taxes. Furthermore, Mona’s mother may have had a senior citizen exemption on the property, which will no longer be appropriate. Lastly, the furnishings in the rent house could now be subject to an ad valorem tax on personalty.