Taxation of Individuals Test Bank
Course Introduction
This course provides an in-depth examination of federal income taxation as it applies to individual taxpayers. Topics include the determination of gross income, allowable deductions, tax credits, filing status, and tax computation methods. Students will explore tax planning strategies, the treatment of capital gains and losses, taxation of self-employed individuals, and the tax implications of life events such as marriage, divorce, and retirement. The course emphasizes practical application of tax laws through case studies and analysis of current statutory and regulatory developments, equipping students with the foundational skills needed to understand and navigate individual tax obligations.
Recommended Textbook
Federal Tax Research 11th Edition by Roby B. Sawyers
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14 Chapters
691 Verified Questions
691 Flashcards
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Chapter 1: Introduction to Tax Practice and Ethics
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54 Verified Questions
54 Flashcards
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Sample Questions
Q1) Which of the following statements best describes Circular 230?
A)Circular 230 has been adopted by the AICPA as its set of rules of practice for CPAs.
B)Circular 230 is a set of Treasury Department ethical and legal standards for those engaging in practice before the IRS.
C)Circular 230 is a set of internal rules at the IRS designed to protect tax practitioners from unfair discipline by the IRS.
D)Circular 230 is a set of ethical rules for taxpayers.
Answer: B
Q2) Which of the following statements best explains the need for tax practitioners to understand nonregulatory ethical models of behavior?
A)Competing ethical solutions must be resolved by the courts.
B)There is more to ethical behavior than just following the rules of professional organizations.
C)Practitioners must always choose the action with the greatest benefit for their client.
D)Ethical choices are clearly spelled out by IRS regulations.
Answer: B
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Chapter 2: Tax Research Methodology
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Which of the following statements is CORRECT regarding online tax research?
A)The method of constructing queries is the same for all databases.
B)Most online tax services allow the use of connectors and wild cards.
C)If a query generates too little information, the researcher should add more unique keywords.
D)All of these are correct.
Answer: B
Q2) The amount of a transaction represents a:
A)law issue
B)social issue
C)fact issue
D)political issue
Answer: C
Q3) After the researcher has located authority that deals with the client's problem, he or she must develop conclusions and recommendations.
A)True
B)False
Answer: False
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Chapter 3: Constitutional and Legislative Sources
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) The first federal income tax law was passed as a result of the:
A)Civil War
B)Mexican-American War
C)Spanish-American War
D)none of these are correct
Answer: A
Q2) The Joint Conference Committee is called on to resolve differences between the House Ways and Means Committee version and the full House version of tax legislation.
A)True
B)False
Answer: False
Q3) The overriding purpose of tax treaties is to:
A)create "tax havens"
B)minimize tax liability of multinational corporations
C)require business taxpayers to file returns in all countries in which they operate
D)eliminate the "double taxation" that a taxpayer would face if his or her income were subject to tax in both countries
Answer: D
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Chapter 4: Administrative Regulations and Rulings
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Sample Questions
Q1) The IRS disclaims responsibility for damages that a taxpayer may suffer in erroneously relying on its taxpayer publications.
A)True
B)False
Q2) T.D. 9479 refers to a Treasury Determination letter.
A)True
B)False
Q3) Treasury Decisions are published first, officially, in:
A)the Internal Revenue Bulletin
B)first in the Internal Revenue Bulletin and then in the Federal Register
C)the Federal Register
D)Congressional Committee Reports
Q4) The IRS issues General Regulations under the general authority granted to the IRS to interpret the language of the Code, usually under a specific Code (or committee report) directive of Congress.
A)True
B)False
Q5) Proposed Regulations have the effect of law.
A)True
B)False
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Chapter 5: Judicial Interpretations
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Sample Questions
Q1) Judicial decisions constitute a primary source of the tax law.
A)True
B)False
Q2) The citation ABC v. U.S, 967 U.S. 567 (2012) tells the tax researcher that this is a decision by which court?
A)District Court
B)Tax Court
C)Supreme Court
D)Court of Appeals
Q3) A taxpayer who loses in the Small Cases Division of the Tax Court may appeal directly to the:
A)Appellate division of the IRS
B)District Court in the taxpayer's circuit
C)U.S. Court of Appeals in the taxpayer's circuit
D)Decisions in the Small Cases Division cannot be appealed
Q4) Either the taxpayer or the IRS may initiate legal proceedings in the federal court system.
A)True
B)False
Q5) Briefly explain how the burden of proof concept is applied.
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Chapter 6: Tax Services Ria Checkpoint
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43 Verified Questions
43 Flashcards
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Sample Questions
Q1) Boolean connectors are used:
A)when the researcher is unsure as to which keywords would be most effective in a search
B)to define the relationship between keywords
C)in intuitive searches
D)none of these are correct
Q2) Why would a researcher use a Table of Contents or Index search instead of a keyword search?
Q3) The Federal Tax Coordinator (FTC) is generally considered the most comprehensive of the three editorial sources in Checkpoint.
A)True
B)False
Q4) Which of the following is INCORRECT regarding Checkpoint?
A)Access to its entire library is available from one screen.
B)It's a free research service.
C)It is owned by Thomson Reuters.
D)All of these are incorrect.
Q5) What is the difference between a Terms & Connectors search and an Intuitive Search in Thomson Reuters Checkpoint? Give an example of each.
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Chapter 7: Tax Services CCH Intelliconnect
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Sample Questions
Q1) Tax treatises and periodicals are:
A)controlling authority
B)secondary sources
C)primary sources
D)updated daily
Q2) A citation search is different from a citator.
A)True
B)False
Q3) The IntelliConnect search for which you must know the Code section, regulation, ruling, paragraph, or other source document is called the:
A)citator search
B)citation search
C)keyword search
D)index search
Q4) IntelliConnect offers access to a bevy of primary source materials under which heading?
A)Key Numbers
B)Federal Tax Editorial Content
C)Federal Tax Primary Sources
D)none of these are correct
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Chapter 8: Tax Services Specialty and Others
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Sample Questions
Q1) The citation for a printed tax journal article should take the following standard format: Sanders, Debra, Susan Gill, and Jill Zuber. 2009. Deductibility of bankruptcy costs and the origin of the claim. The Tax Advisor 40 (8): at 528.
A)True
B)False
Q2) BNA Bloomberg is best known in the tax community as the publisher of the:
A)BNA Collections
B)BNA Tax Management Portfolio
C)BNA Bloomberg Tax & Accounting Center
D)BNA Citators
Q3) The Westlaw search engine designed to tailor search results to the most relevant items based on the expertise of experienced law researchers is called the:
A)WestSearch search engine
B)Boolean Terms search engine
C)Wildcard search engine
D)Regulations search engine
Q4) What are some of the Tax Analysts publications? Describe them briefly.
Q5) How is each BNA Portfolio arranged?
Q6) What are KeySearch and the West Key Number System?
Page 10
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Chapter 9: Multijurisdictional and Other Research
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Sample Questions
Q1) In today's expanding tax planning and compliance, tax practitioners need to service their clients by adding to federal tax planning:
A)tax analysis
B)investment planning
C)state and local tax planning
D)estate planning
Q2) The clause with a goal to create a national economy unencumbered by discriminatory, arbitrary jurisdictional standards of the states is called the:
A)Supremacy Clause
B)Due Process Clause
C)Commerce Clause
D)Equal Protection Clause
Q3) Generally, inventory sales are sourced by the location of the transaction.
A)True
B)False
Q4) A transaction country is a country where the taxpayer resides or an entity is located.
A)True
B)False
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Chapter 10: Financial Accounting Research
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42 Verified Questions
42 Flashcards
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Sample Questions
Q1) Using the Codification Research System (CRS), a researcher can join all related sections of a topic into a single document so that the guidance across all sections within a topic can be reviewed at one time.
A)True
B)False
Q2) How is the Codification Research System's "Join Sections" function useful to tax researchers? Give an example of how it works.
Q3) Which of the following International Accounting Standards deals with international guidance for accounting for income taxes?
A)IAS 29
B)ASC 740
C)SFAS 109
D)IAS 12
Q4) ASC 740 requires taxpayers to examine each and every "tax position" taken.
A)True
B)False
Q5) "A sound understanding of financial accounting is essential for tax professionals." Discuss.
Q6) Explain the basic principles of accounting for deferred taxes.
Page 12
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Chapter 11: Communicating Research Results
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Sample Questions
Q1) Effective written business communication often makes use of which of the following guidelines?
A)Write in direct, active voice and use short sentences. Organize your writing in paragraphs and use transition words to help the reader follow your logic and thought process.
B)Consider the reader--all audiences are not the same. Writing for another tax professional is very different from writing for a client who is not skilled in tax law.
C)Be organized.Make sure you understand the objective of your communication and organize your thoughts and your message before you start to write.
D)All of these are correct.
Q2) A file memorandum should include citations to secondary sources of tax law, such as commercial tax services.
A)True
B)False
Q3) Identify the major elements of a client letter, and briefly discuss the difference between a letter to a sophisticated client and to an unsophisticated client.
Q4) Identify five types of tax-related communications.
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Chapter 12: Tax Planning
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Sample Questions
Q1) The tax rate which is computed by simply dividing the total tax liability by the corresponding tax base is known as the:
A)capital gains tax rate
B)average tax rate
C)effective tax rate
D)marginal tax rate
Q2) Jeffrey Heinz, a salaried person, incurred a loss of $4,000 from passive activities. This loss can be applied as a deduction to offset taxable income from:
A)his salary
B)his long-term capital gains for the year
C)passive activities
D)any source
Q3) Where ATC = after-tax cost, BTC = before-tax cost, and MTR = marginal tax rate, the after-tax cost of tax planning can be expressed as:
A)ATC = BTC × (1 - MTR)
B)a factor of the time value of money
C)MTR × taxable income = ATC
D)ATC = BTC ÷ (1 - MTR)
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Chapter 13: Working With the IRS
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Sample Questions
Q1) A taxpayer's return is classified for audit after receiving a high DIF score and being manually screened by an IRS classifier. Which of the following statements best describes whether the taxpayer will be contacted by an auditor or revenue agent?
A)The taxpayer will be contacted since a high DIF score always will mean some type of audit.
B)The taxpayer will be contacted because only the National Office has the power to decide that after screening, the return need not be audited.
C)The taxpayer will not necessarily be contacted since after the Service Center review, it may be decided that an audit is unwarranted because the return will be manually inspected for audit determination.
D)The taxpayer will not necessarily be contacted by an auditor or revenue agent since after the return is screened by the Service Center, it then is randomly selected for audit.
Q2) The Commissioner of the Internal Revenue Service (IRS) is appointed by the:
A)President of the United States
B)Secretary of the Treasury
C)Senate
D)Congress
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Chapter 14: Tax Practice and Administration: Sanctions, Agreements, and Disclosures
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Sample Questions
Q1) The standard for conviction in a criminal case is establishment of:
A)guilt with some reasonable doubt
B)guilt beyond reasonable doubt
C)any guilt even though highly doubtful
D)criminal intent even though not implemented
Q2) What is the procedure for claiming a refund or credit for overpayment of tax?
Q3) William, a taxpayer, timely mailed his tax return. However, it was returned for insufficient postage. IRS imposed a penalty. Can William claim waiver of penalty?
A)Yes, William can claim waiver of penalty since it is his first tax return.
B)Yes, William can claim waiver since the failure to file tax return is due to a reasonable cause.
C)No, William cannot claim waiver since it is a case of willful neglect.
D)No, William cannot claim waiver of penalty as he is a delinquent taxpayer.
Q4) An individual should make a claim for refund or credit in the Form 1040X.
A)True
B)False
Q5) How do the courts define reasonable cause? List the examples of reasonable cause.
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