Chapter 1 Tax Accounting, Complete Summary Guide.

Chapter 1 Tax Accounting, Complete Summary Guide. tax base - Indicate: amount to which tax rate is applied tax rates - Indicate: percentage applied to the tax base the determine the taxpayers liability tax liability equation - Indicate: tax base x tax rate = tax liability Adam Smith's canons (principles of taxation) - Indicate: *equity *certainty *convenience of payment *economy in collection equity (principle) - Indicate: each taxpayer enjoys fair or equitable treatment by paying taxes in proportion to his income level certainty (principle) - Indicate: a tax should be certain rather than arbitrary convenience of payment (principle) - Indicate: taxes should be imposed in a manner that involves a convenient time for payment. such as the pay-as-you-go existing withholding system economy in collection (principle) - Indicate: a good tax system involves only nominal collection costs by the government and minimal compliance costs on the part of the taxpayer ad valorem taxes - Indicate: A tax imposed on the value of property. The most common is that imposed by states, counties, and cities on real estate. can be imposed on personal property as well. homestead exemption - Indicate: makes some portion of the value of a personal residence exempt from tax intangible property - Indicate: stocks, bonds and various other securities transaction taxes - Indicate: cover transfers of property and are normally determined by multiplying the value by a percentage rate