Page 1
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,TABLEOF CONTENTS mf
Chapter 1: An Introduction to T axation and Understanding the F ederal Tax L aw Chapter
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2:Working with t he Tax Law
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Chapter 03: Tax Formula and Tax Determination Chapter
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mf 04: Gross Income: Concepts and I nclusions Chapter 05:
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Gross I ncome: Exclusions fm fm
Chapter 06: Deductions a nd L osses: In General
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Chapter 07: Deductions and Losses: Certain Business Expenses Chapte
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r 08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 0
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9: Deductions: Employee and Self-Employed-
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Related Expense Chapter 10: Deductions and Losses: Certain Itemized D
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eductions Chapter 11: I nvestor Losses mf mf mf mf
Chapter 12: Alternative Minimum Tax mf mf mf mf
Chapter 13: T ax Credits a nd P ayment Procedures
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Chapter 14: P roperty Transactions: Determination of Gain or Loss and Ch
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apter 15: Property Transactions: Nontaxable Exchanges
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Chapter 16: Property Transactions: Capital Gains and Losses Chapt
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er 17: Property Transactions: 1231 and Recapture Provisions Chapte
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r18:Accounting Periods and M ethods
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Chapter 19: Deferred Com pensation Chapter fm fm fm mf
mf 20: Corporations and Partnerships
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Page 2
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, Chapter 01 20252 Individuals
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Answers2at2the2end2 of2each2chapter
Indicate whether t he statement i s 2 true or fals e.
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1. Sales made ov er the internet are not2exempt2from the application of a general sales (or us e) tax.
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a. True
b. False
2. Upon audit by the I RS, Faith is assess ed a d eficiency of $40,000 of whic h $25,000 is attributable to n egligenc e.
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The220% negligence penalty will apply to $25,000.
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a. True
b. False
3. Ultimately, most t axes are paid by individuals.
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a. True
b. False
4. Even if property tax rates are not2c hanged, the amount of ad valorem2taxes imposed on r ealty m ay not r emainthe same.
m
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a. True
b. False
5. The principal objectiv e of the FUTA2tax 2is to prov ide some meas ure of retirement sec urity .
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a. True
b. False
6. If more IRS audits are producing a higher number of no c hange results, this indicates increased compliance onthe2
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part of taxpayers.
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a. True
b. False
7. A safe2and easy way for a taxpayer to avoid local and state sales tax es is to make the purchas e in a state2thatlev i
m
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es no such taxes.
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a. True
b. False
8. A2calendar y ear tax pay er files his 2023 Federal income tax return on March 4, 2024. The return reflects 2an overpay
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ment2of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need no
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t2 include interest.
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a. True
b. False
9. A tax 2cut enacted by Congress that contains a sunset prov ision will mak e2the t ax cut temporary.
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a. True
b. False
Page 3 mf
, Name: Class: Date:
Chapter 01 2025 Individual
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s
10. For Federal inc ome tax 2 purpos es, there never has been a general amnes ty period.
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a. True
b. False
11. To lessen or eliminate the effect of multiple tax ation, a taxpayer who2 is subject2to both foreign and U.S. inc ome tax e
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s on the2same inc ome is allowed either a deduction or a credit2for the foreign tax paid.
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a. True
b. False
12. Because it2 is cons istent with the wherewithal to pay conc ept, the tax law requires a seller to rec ogniz e a gain inth
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e year the ins tallm ent s ale occ urs .
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a. True
b. False
13. The2 amount of a taxpayer’s 2itemiz ed d eductions will i ncrease the c hanc e2of b eing audited by the IRS.
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a. True
b. False
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has 2not2
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made a taxable gift.
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a. True
b. False
15. For omissions from gross income in excess of 25% of that2reported, there is no2statute of limitations on a
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d ditional inc ome tax ass es s ments by the IRS.
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a. True
b. False
16. Stealth tax es h ave2 the effect2 of g enerating additional taxes from a ll t axpayers.
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a. True
b. False
17. J as on’s bus iness warehous e is des troy ed by fire. Bec ause the ins uranc e proc eeds ex ceed the bas is of the propert
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y, a gain results. If Jas on shortly reinvests the proc eeds in a new warehouse, no2 gain is recognized due2to the applic ation of
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t he wherewithal to2 pay c onc ept.
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a. True
b. False
18. An inheritance2 tax is a tax 2 on a decedent’s right to2pass property at death.
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a. True
b. False
19. When interest2 is c harged on a d efic iency, any part2 of a month counts as 2 a full month.
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a. True
Page 4 mf
mf
,TABLEOF CONTENTS mf
Chapter 1: An Introduction to T axation and Understanding the F ederal Tax L aw Chapter
mf mf mf mf mf mf mf mf mf mf mf mf fm
2:Working with t he Tax Law
fm fm fm fm fm
Chapter 03: Tax Formula and Tax Determination Chapter
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mf 04: Gross Income: Concepts and I nclusions Chapter 05:
mf mf mf mf mf mf fm fm
Gross I ncome: Exclusions fm fm
Chapter 06: Deductions a nd L osses: In General
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Chapter 07: Deductions and Losses: Certain Business Expenses Chapte
mf mf mf mf mf mf mf m f
r 08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 0
mf mf mf mf mf mf mf mf mf
9: Deductions: Employee and Self-Employed-
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Related Expense Chapter 10: Deductions and Losses: Certain Itemized D
mf mf mf mf mf mf mf mf mf
eductions Chapter 11: I nvestor Losses mf mf mf mf
Chapter 12: Alternative Minimum Tax mf mf mf mf
Chapter 13: T ax Credits a nd P ayment Procedures
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Chapter 14: P roperty Transactions: Determination of Gain or Loss and Ch
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apter 15: Property Transactions: Nontaxable Exchanges
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Chapter 16: Property Transactions: Capital Gains and Losses Chapt
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er 17: Property Transactions: 1231 and Recapture Provisions Chapte
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r18:Accounting Periods and M ethods
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Chapter 19: Deferred Com pensation Chapter fm fm fm mf
mf 20: Corporations and Partnerships
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Page 2
mf
, Chapter 01 20252 Individuals
mf mf mf
Answers2at2the2end2 of2each2chapter
Indicate whether t he statement i s 2 true or fals e.
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1. Sales made ov er the internet are not2exempt2from the application of a general sales (or us e) tax.
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
2. Upon audit by the I RS, Faith is assess ed a d eficiency of $40,000 of whic h $25,000 is attributable to n egligenc e.
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
The220% negligence penalty will apply to $25,000.
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a. True
b. False
3. Ultimately, most t axes are paid by individuals.
m
f mf mf mf mf mf mf mf
a. True
b. False
4. Even if property tax rates are not2c hanged, the amount of ad valorem2taxes imposed on r ealty m ay not r emainthe same.
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
5. The principal objectiv e of the FUTA2tax 2is to prov ide some meas ure of retirement sec urity .
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
6. If more IRS audits are producing a higher number of no c hange results, this indicates increased compliance onthe2
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part of taxpayers.
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a. True
b. False
7. A safe2and easy way for a taxpayer to avoid local and state sales tax es is to make the purchas e in a state2thatlev i
m
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es no such taxes.
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a. True
b. False
8. A2calendar y ear tax pay er files his 2023 Federal income tax return on March 4, 2024. The return reflects 2an overpay
m
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ment2of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need no
mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
t2 include interest.
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a. True
b. False
9. A tax 2cut enacted by Congress that contains a sunset prov ision will mak e2the t ax cut temporary.
m
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a. True
b. False
Page 3 mf
, Name: Class: Date:
Chapter 01 2025 Individual
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s
10. For Federal inc ome tax 2 purpos es, there never has been a general amnes ty period.
m
f mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
11. To lessen or eliminate the effect of multiple tax ation, a taxpayer who2 is subject2to both foreign and U.S. inc ome tax e
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
s on the2same inc ome is allowed either a deduction or a credit2for the foreign tax paid.
mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
12. Because it2 is cons istent with the wherewithal to pay conc ept, the tax law requires a seller to rec ogniz e a gain inth
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
e year the ins tallm ent s ale occ urs .
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a. True
b. False
13. The2 amount of a taxpayer’s 2itemiz ed d eductions will i ncrease the c hanc e2of b eing audited by the IRS.
m
f mf mf mf mf mf mf mf mf mf mf mf mf mf mf
a. True
b. False
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has 2not2
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f mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
made a taxable gift.
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a. True
b. False
15. For omissions from gross income in excess of 25% of that2reported, there is no2statute of limitations on a
m
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d ditional inc ome tax ass es s ments by the IRS.
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a. True
b. False
16. Stealth tax es h ave2 the effect2 of g enerating additional taxes from a ll t axpayers.
m
f mf mf mf mf mf mf mf mf mf mf
a. True
b. False
17. J as on’s bus iness warehous e is des troy ed by fire. Bec ause the ins uranc e proc eeds ex ceed the bas is of the propert
mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
y, a gain results. If Jas on shortly reinvests the proc eeds in a new warehouse, no2 gain is recognized due2to the applic ation of
mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf mf
t he wherewithal to2 pay c onc ept.
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a. True
b. False
18. An inheritance2 tax is a tax 2 on a decedent’s right to2pass property at death.
m
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a. True
b. False
19. When interest2 is c harged on a d efic iency, any part2 of a month counts as 2 a full month.
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a. True
Page 4 mf
