ACC 3304 Tax Exam 1 (Chapters 1-4) Questions With
Complete Solutions
"For" AGI vs. "From" AGI Correct Answers For - taken into
account in calculating AGI
From- taking away from AGI
3 types of primary sources for authority Correct Answers 1.
Legislative (US Constitution, Internal Revenue Code, Tax
treaties, committee reports)
2. Administrative/Executive (Treasury regulations, revenue
rulings, revenue procedures, private letter rulings)
3. Judicial
5 steps in the tax research process Correct Answers 1. Gather
facts
2. Identify issues
3. Locate relevant sources of authority
4. Analyze and evaluate relevant authorities
5. Communicating research findings-tax memo structure
a capital asset is NOT: Correct Answers 1. inventory
2. supplies
3. A/R
4. real or depreciable property used in trade of business
Acquiescence Correct Answers IRS announces it will accept
court's decision and follow it in similar fact patterns in the future
After-tax rate of return Correct Answers same as after-tax
income, just in terms of %
, Are "For" or "From" AGI deductions more valuable? Correct
Answers "For" - many deductions are based on AGI
Are all tax returns audited? Correct Answers No
Average tax rate formula Correct Answers Tax/Taxable
income
Certainty Correct Answers determining when, where, and how
much to pay
Components of a tax system Correct Answers 1. Governments
perspective:
a. Tax revenue (tax base * tax rate)
b. tax base (taxable wages, gains, etc.)
c. tax rate (level of tax (%))
2. Taxpayer's perspective
a. After-tax income = tax base * (1-tax rate)
3. Accordingly, how can the government INCREASE tax
revenues?
a. Increase tax base
b. Increase tax rate
Convenience Correct Answers ease of collecting the tax
deductions reduce __________ Correct Answers taxable
income
Complete Solutions
"For" AGI vs. "From" AGI Correct Answers For - taken into
account in calculating AGI
From- taking away from AGI
3 types of primary sources for authority Correct Answers 1.
Legislative (US Constitution, Internal Revenue Code, Tax
treaties, committee reports)
2. Administrative/Executive (Treasury regulations, revenue
rulings, revenue procedures, private letter rulings)
3. Judicial
5 steps in the tax research process Correct Answers 1. Gather
facts
2. Identify issues
3. Locate relevant sources of authority
4. Analyze and evaluate relevant authorities
5. Communicating research findings-tax memo structure
a capital asset is NOT: Correct Answers 1. inventory
2. supplies
3. A/R
4. real or depreciable property used in trade of business
Acquiescence Correct Answers IRS announces it will accept
court's decision and follow it in similar fact patterns in the future
After-tax rate of return Correct Answers same as after-tax
income, just in terms of %
, Are "For" or "From" AGI deductions more valuable? Correct
Answers "For" - many deductions are based on AGI
Are all tax returns audited? Correct Answers No
Average tax rate formula Correct Answers Tax/Taxable
income
Certainty Correct Answers determining when, where, and how
much to pay
Components of a tax system Correct Answers 1. Governments
perspective:
a. Tax revenue (tax base * tax rate)
b. tax base (taxable wages, gains, etc.)
c. tax rate (level of tax (%))
2. Taxpayer's perspective
a. After-tax income = tax base * (1-tax rate)
3. Accordingly, how can the government INCREASE tax
revenues?
a. Increase tax base
b. Increase tax rate
Convenience Correct Answers ease of collecting the tax
deductions reduce __________ Correct Answers taxable
income
