TEST BANK FOR
Fundamentals of Taxation 2024 Edition By Ana Cruz, Michael Deschamps, Frederick
Niswander, Debra Prendergast and Dan Schisler
Chapter 1-15 Answers are at the End of Each Chapter
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
Chapter 1
Student name:
1) The U.S. individual income tax system is an example of a progressive tax rate structure.
⊚ true
⊚ false
2) A proportional tax rate structure is a tax where the tax rate remains at the same rate
regardless of the tax base.
⊚ true
⊚ false
3) Under a flat tax, the marginal tax rate and the average tax rate are different.
⊚ true
⊚ false
4) State and local taxes levied on either property or sales are examples of progressive taxes.
⊚ true
⊚ false
5) With a regressive tax, the tax rate increases as the tax base gets larger.
⊚ true
⊚ false
6) The marginal tax rate is the total tax liability divided by the taxable income.
⊚ true
⊚ false
, 7) The average tax rate is the total tax liability divided by the taxable income.
⊚ true
⊚ false
8) All individual income tax returns follow the basic structure of the simplified tax formula.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
9) With a progressive rate structure, the average tax rate is always smaller than the marginal tax
rate.
⊚ true
⊚ false
10) At high levels of taxable income, the average tax rate and the marginal tax rate will always
be the same.
⊚ true
⊚ false
11) Wages, salaries, and tips are compensation for services rendered. However, commissions,
bonuses, and severance pay are not taxable.
⊚ true
⊚ false
12) Federal unemployment compensation benefits are not taxable.
⊚ true
⊚ false
13) A single taxpayer cannot file a Form 1040 if she is age 65 or older.
⊚ true
⊚ false
, 14) One of the criteria to file a Form 1040 is that the total taxable income of the taxpayer cannot
exceed $100,000.
⊚ true
⊚ false
15) Employers report wage income to employees on a Form W-3.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
16) Individuals who file a Form 1040 should determine their tax liability with reference to a tax
rate schedule.
⊚ true
⊚ false
17) Taxpayers normally pay almost all of their tax liability when they file their income tax return.
⊚ true
⊚ false
18) The amount of tax liability is affected by the filing status of the taxpayer.
⊚ true
⊚ false
19) The tax liability of a single individual with taxable income of $91,447 is $15,421. Use the
appropriate Tax tables.
⊚ true
⊚ false
20) Tax liability is calculated using taxable income. A standard deduction is then subtracted from
the tax liability.
⊚ true
⊚ false
, 21) The Affordable Care Act requires all individuals to have health care insurance coverage.
⊚ true
⊚ false
22) If taxpayers are covered by Medicare, they are deemed to have qualifying health care
insurance coverage.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
23) There are two types of primary tax authority: statutory and judicial.
⊚ true
⊚ false
24) Typically, federal tax legislation is introduced in the Senate Finance Committee.
⊚ true
⊚ false
25) IRS Regulations are by far the strongest administrative authority.
⊚ true
⊚ false
26) A Private Letter Ruling is considered to be tax authority only to the taxpayer to whom it is
issued.
⊚ true
⊚ false
27) One major disadvantage the taxpayer has when filing a petition with the Tax Court is that the
IRS's proposed tax assessment must be paid prior to trial.
⊚ true
⊚ false
Fundamentals of Taxation 2024 Edition By Ana Cruz, Michael Deschamps, Frederick
Niswander, Debra Prendergast and Dan Schisler
Chapter 1-15 Answers are at the End of Each Chapter
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
Chapter 1
Student name:
1) The U.S. individual income tax system is an example of a progressive tax rate structure.
⊚ true
⊚ false
2) A proportional tax rate structure is a tax where the tax rate remains at the same rate
regardless of the tax base.
⊚ true
⊚ false
3) Under a flat tax, the marginal tax rate and the average tax rate are different.
⊚ true
⊚ false
4) State and local taxes levied on either property or sales are examples of progressive taxes.
⊚ true
⊚ false
5) With a regressive tax, the tax rate increases as the tax base gets larger.
⊚ true
⊚ false
6) The marginal tax rate is the total tax liability divided by the taxable income.
⊚ true
⊚ false
, 7) The average tax rate is the total tax liability divided by the taxable income.
⊚ true
⊚ false
8) All individual income tax returns follow the basic structure of the simplified tax formula.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
9) With a progressive rate structure, the average tax rate is always smaller than the marginal tax
rate.
⊚ true
⊚ false
10) At high levels of taxable income, the average tax rate and the marginal tax rate will always
be the same.
⊚ true
⊚ false
11) Wages, salaries, and tips are compensation for services rendered. However, commissions,
bonuses, and severance pay are not taxable.
⊚ true
⊚ false
12) Federal unemployment compensation benefits are not taxable.
⊚ true
⊚ false
13) A single taxpayer cannot file a Form 1040 if she is age 65 or older.
⊚ true
⊚ false
, 14) One of the criteria to file a Form 1040 is that the total taxable income of the taxpayer cannot
exceed $100,000.
⊚ true
⊚ false
15) Employers report wage income to employees on a Form W-3.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
16) Individuals who file a Form 1040 should determine their tax liability with reference to a tax
rate schedule.
⊚ true
⊚ false
17) Taxpayers normally pay almost all of their tax liability when they file their income tax return.
⊚ true
⊚ false
18) The amount of tax liability is affected by the filing status of the taxpayer.
⊚ true
⊚ false
19) The tax liability of a single individual with taxable income of $91,447 is $15,421. Use the
appropriate Tax tables.
⊚ true
⊚ false
20) Tax liability is calculated using taxable income. A standard deduction is then subtracted from
the tax liability.
⊚ true
⊚ false
, 21) The Affordable Care Act requires all individuals to have health care insurance coverage.
⊚ true
⊚ false
22) If taxpayers are covered by Medicare, they are deemed to have qualifying health care
insurance coverage.
⊚ true
⊚ false
thinking is essential for students who plan to pursue careers in fields that rely heavily on mathematics, such as finance, physics, computer science, and actuarial science.While business and law exams may
emphasize analysis and application, mathematics exams focus on the precise application of learned methods and the development of abstract reasoning. In mathematics, the solution to a problem often exists
as a single correct answer, but the journey to that solution may involve multiple steps that require a deep understanding of the underlying mathematical principles.6. Challenges Faced by Students in
Business, Law, and Mathematics ExamsDespite the clear structure and purpose of exams in business, law, and mathematics, students often face considerable challenges in preparing for and performing well
in these exams. The challenges differ by discipline, reflecting the unique demands of each field.6.1. Challenges in Business ExamsOne of the primary challenges in business exams is the need to balance
theoretical understanding with practical application. Many business exams, especially those based on case studies, require students to analyze complex scenarios with limited information. Students often
struggle with formulating a strategic approach or making decisions based on incomplete data, as business problems in the real world rarely have clear-cut solutions.Additionally, business exams often require
interdisciplinary knowledge. For example, a student might be asked to analyze a business situation that involves financial accounting, marketing strategies, and organizational behavior all at once. Students
must be proficient in these diverse fields, which can be difficult given the breadth of material covered in business programs.6.2. Challenges in Law ExamsFor law students, the greatest challenge is often the
need for extensive memorization and the ability to recall vast amounts of information quickly. In addition to learning complex legal principles and precedents, students must also master the art of legal
reasoning, which involves not only remembering case law but also understanding its application in different contexts. Law students often need to differentiate between nuanced legal principles, which can be
difficult for those without experience in the field.Moreover, law exams tend to be long and require detailed written responses. These exams test the student’s ability to construct well-organized, persuasive
arguments within a limited amount of time. Many law students report difficulty with time management, as they must balance legal analysis with the need for coherent and concise writing.6.3. Challenges in
Mathematics ExamsMathematics exams present their own unique set of challenges. The primary difficulty lies in the precision required. A small mistake in calculations, a misstep in applying a formula, or
an incorrect assumption can lead to incorrect answers. Mathematics exams demand a high level of attention to detail and logical consistency. Additionally, students are often required to show their work,
which means demonstrating the thought process behind the solution,
23) There are two types of primary tax authority: statutory and judicial.
⊚ true
⊚ false
24) Typically, federal tax legislation is introduced in the Senate Finance Committee.
⊚ true
⊚ false
25) IRS Regulations are by far the strongest administrative authority.
⊚ true
⊚ false
26) A Private Letter Ruling is considered to be tax authority only to the taxpayer to whom it is
issued.
⊚ true
⊚ false
27) One major disadvantage the taxpayer has when filing a petition with the Tax Court is that the
IRS's proposed tax assessment must be paid prior to trial.
⊚ true
⊚ false
