FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 1: Introduction to Taxation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Elk, a C corporation, has $370,000 operating income and $290,000 operating expenses during the year. In addition, Elk has a $10,000 long-term capital gain and a $17,000 short-term capital loss. Elk's taxable income is:

A) $63,000.
B) $73,000.
C) $80,000.
D) $90,000.
E) None of the above.

F) A) and B)
G) B) and E)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Taxes levied by all states include:

A) Tobacco excise tax.
B) Individual income tax.
C) Inheritance tax.
D) General sales tax.
E) None of these.

F) A) and E)
G) None of the above

Correct Answer

verified

Show Answer

Question 33

Essay

Review LaterAdd Note

Several years ago, Logan purchased extra grazing land for his ranch at a cost of $240,000. In 2016, the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Logan receives $600,000 for the land. Within the same year, he replaces the property with other grazing land. What is Logan's tax situation if the replacement land cost: a.$210,000? b.$360,000? c.$630,000? d.Why?

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.

Property can be transferred within the family group by gift or at death. One motivation for preferring the gift approach is:

The annual exclusion, currently $14,000, is available for gift and estate tax purposes.

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

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Norma formed Hyacinth Enterprises, a proprietorship, in 2016. In its first year, Hyacinth had operating income of $400,000 and operating expenses of $240,000. In addition, Hyacinth had a long-term capital loss of $10,000. Norma, the proprietor of Hyacinth Enterprises, withdrew $75,000 from Hyacinth during the year. Assuming Norma has no other capital gains or losses , and ignoring any self-employment taxes, how does this information affect her adjusted gross income for 2016?

Jake, the sole shareholder of Peach Corporation, a C corporation, has the corporation pay him $100,000. For income tax purposes, Jake would prefer to have the payment treated as dividend instead of salary.

Using the choices provided below, show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (non-fossil) fuels.

Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Donald owns a 45% interest in a partnership that earned $130,000 in the current year. He also owns 45% of the stock in a C corporation that earned $130,000 during the year. Donald received $20,000 in distributions from each of the two entities during the year. With respect to this information, Donald must report $78,500 of income on his individual income tax return for the year.

The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

States impose either a state income tax or a general sales tax, but not both types of taxes.

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.

Double taxation of corporate income results because dividend distributions are included in a shareholder's gross income but are not deductible by the corporation.