South-Western Federal Taxation 2022: Individual Income Taxes 45th edition by James C. Young Test ban
23. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.
a. True
b. False
ANSWER: False
24. On transfers by death, the Federal government relies on an estate tax, while states may impose an estate tax, an inheritance tax, both taxes, or neither tax.
a. True
b. False
ANSWER: True
25. An inheritance tax is a tax on a decedent’s right to pass property at death.
a. True
b. False
ANSWER: False
26. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within a family unit.
a. True
b. False
ANSWER: True
27. Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint’s death.
a. True
b. False
ANSWER: True
28. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.
a. True
b. False
ANSWER: True
29. The annual exclusion, currently $15,000, is available for gift and estate tax purposes.
a. True
b. False
ANSWER: False
30. In 2021, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.
a. True
b. False
ANSWER: False
31. Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be allowed as to these gifts.
a. True
b. False
ANSWER: True
32. One of the motivations for making a gift is to save on income taxes.
a. True
b. False
ANSWER: True
33. The formula for the Federal income tax on corporations is the same as that applicable to individuals.
a. True
b. False
ANSWER: False
34. A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.
a. True
b. False
ANSWER: True
35. For state income tax purposes, some states allow a credit for dependents rather than a deduction.
a. True
b. False
ANSWER: True
36. Some states use their state income tax return as a means of collecting unpaid sales and use taxes.
a. True
b. False
ANSWER: True
37. No state may offer an income tax amnesty program more than once.
a. True
b. False
ANSWER: False
38. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
ANSWER: True
39. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
b. False
ANSWER: False
40. When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.
a. True
b. False
ANSWER: True
41. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
ANSWER: False
42. Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
a. True
b. False
ANSWER: False
43. A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.
a. True
b. False
ANSWER: True
44. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
a. True
b. False
ANSWER: True