Test Bank For South-Western Federal Taxation 2023 Comprehensive, 46th Edition by Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young Chapter 1-28

Chapter 01: Understanding and Working with the Federal Tax Law

1. 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: More than 50% use tax return preparers and about 33% purchase tax return software.
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Reporting
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM

2. 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 the tax only on individuals. The income tax on
corporations had been previously sanctioned by the courts.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Research
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM




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,Chapter 01: Understanding and Working with the Federal Tax Law

3. 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: A Federal income tax during the Civil War that was sanctioned by the U.S. Supreme
Court.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Research
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM

4. 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
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Research
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM




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,Chapter 01: Understanding and Working with the Federal Tax Law

5. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False

ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-02 - LO: 1-02
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Research
KEYWORDS: Bloom's: Knowledge
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM

6. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle) 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.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: United States - BUSPROG: Technology
STATE STANDARDS: United States - AK - AICPA: FN-Reporting
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM




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, Chapter 01: Understanding and Working with the Federal Tax Law

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.
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: United States - BUSPROG: Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM

8. The Federal estate and gift taxes are examples of progressive taxes.
a. True
b. False

ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: CMPV.SWFT.2020.LO: 1-03 - LO: 1-03
NATIONAL STANDARDS: United States - BUSPROG: Comprehension
STATE STANDARDS: United States - AK - AICPA: FN-Measurement -
AICPA: FN-Measurement
KEYWORDS: Bloom's: Comprehension
OTHER: Time: 2 min.
DATE CREATED: 2/27/2019 6:57 PM
DATE MODIFIED: 2/27/2019 7:04 PM




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