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Practice Questions: Taxation Chapter 1--an Introduction to Taxati...

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Practice Questions: Taxation Chapter 1--an Introduction to Taxation and Understanding the Federal Tax Law

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CHAPTER 1--AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAWCHAPTER 1--AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAW Student: ___________________________________________________________________________ 1. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations. True False

2. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals. True False

3. 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%. True False

4. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations. True False

5. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon of certainty. True False

6. Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance. True False

7. The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase. True False

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

9. The Federal excise tax on cigarettes is an example of a proportional tax. True False

10. Currently, the Federal income tax is more progressive than it ever has been in the past. True False

11. Mona inherits her mother’s personal residence, which she converts to a furnished rent house. These changes should not affect the amount of ad valorem property taxes levied on the properties. True False

12. A fixture will be subject to the ad valorem tax on realty rather than the ad valorem tax on personalty. True False

13. If property tax rates are not changed, the amount of ad valorem taxes imposed on...