South-Western Federal Taxation 2022 Essentials of Taxation Individuals and Business Entities 25th ed

ANSWER: a
64. Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?
a.  Taxpayer compliance is greater for personal use property than for business use property.
b.  The tax on automobiles sometimes considers the age of the vehicle.
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Ch 1 Introduction To Taxation
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c.  Most states impose a tax on intangibles.
d.  The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid.
ANSWER: b
65. Federal excise taxes that are no longer imposed include:
a.  Tax on air travel.
b.  Tax on wagering.
c.  Tax on alcohol.
d.  None of these.
ANSWER: d
66. Taxes not imposed by the Federal government include:
a.  Tobacco excise tax.
b.  Customs duties (tariffs on imports).
c.  Tax on rental cars.
d.  Gas guzzler tax.
ANSWER: c
67. Taxes levied by both states and the Federal government include:
a.  General sales tax.
b.  Customs duties.
c.  Hotel occupancy tax.
d.  None of these.
ANSWER: d
68. Taxes levied by all states include:
a.  Tobacco excise tax.
b.  Individual income tax.
c.  Inheritance tax.
d.  General sales tax.
ANSWER: a
69. A use tax is imposed by:
a.  The Federal government and all states.
b.  The Federal government and a majority of the states.
c.  All states but not the Federal government.
d.  Most of the states but not the Federal government.
ANSWER: d
70. Gabriele and Lisa are married and live in a common law state. They want to make gifts to their four children in 2021.
What is the maximum amount of the annual exclusion they will be allowed for these gifts?
a.  $15,000.
b.  $30,000.
c.  $60,000.
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Class:
Date:
Ch 1 Introduction To Taxation
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d.  $120,000.
ANSWER: d
71. Property can be transferred within the family group by gift or at death. One motivation for preferring the gift approach
is:
a.  To take advantage of the higher unified transfer tax credit available under the gift tax.
b.  To avoid a future decline in value of the property transferred.
c.  To take advantage of the per donee annual exclusion.
d.  To shift income to higher bracket donees.
ANSWER: c
72. Indicate which, if any, statement is incorrect. State income taxes:
a.  Can piggyback to the Federal version.
b.  Cannot apply to visiting nonresidents.
c.  Can decouple from the Federal version.
d.  Can provide occasional amnesty programs.
ANSWER: b
73. State income taxes generally can be characterized by:
a.  The same date for filing as the Federal income tax.
b.  No provision for withholding procedures.
c.  Allowance of a deduction for Federal income taxes paid.
d.  Applying only to individuals but not to corporations.
ANSWER: a
74. A characteristic of FICA tax is that:
a.  It does not apply when one spouse works for the other spouse.
b.  It is imposed only on the employer.
c.  It provides a modest source of income in the event of loss of employment.
d.  None of these.
ANSWER: d
75. A characteristic of FUTA is that:
a.  It is imposed on both employer and employee.
b.  It is imposed solely on the employee.
c.  Compliance requires following guidelines issued by both state and Federal regulatory authorities.
d.  It is applicable to spouses of employees but not to any children under age 18.
ANSWER: c
76. The United States (either Federal, state, or local) does not impose:
a.  Franchise taxes.
b.  Severance taxes.
c.  Custom duties.
d.  Export duties.
Name:
Class:
Date:
Ch 1 Introduction To Taxation
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ANSWER: d
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77. Both economic and social considerations can be used to justify:
a.  Favorable tax treatment for accident and health plans provided for employees and financed by employers.
b.  Disallowance of any deduction for expenditures deemed to be contrary to public policy (e.g., fines, penalties,
illegal kickbacks, bribes to government officials).
c.  Various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional
education.
d.  Allowance of a deduction for state and local income taxes paid.
ANSWER: c