South-Western Federal Taxation 2022: Individual Income Taxes 45th edition by James C. Young Test ban

ANSWER:  True
 
66. In preparing an income tax return, the use of a client’s estimates is not permitted.
 a. True
 b. False
 
ANSWER:  False
 
67. In preparing a tax return, all questions on the return must be answered.
 a. True
 b. False
 
ANSWER:  False
 
68. A CPA firm in California sends many of its less complex tax returns to be prepared by a group of accountants in India. If certain procedures are followed, this outsourcing of tax return preparation is proper.
 a. True
 b. False
 
ANSWER:  True
 
69. The objective of pay-as-you-go (paygo) is to improve administrative feasibility.
 a. True
 b. False
 
ANSWER:  True
 
70. When Congress enacts a tax cut that is phased in over a period of years, revenue neutrality is achieved.
 a. True
 b. False
 
ANSWER:  False
 
71. A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
 a. True
 b. False
 
ANSWER:  True
 
72. 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.
 a. True
 b. False
 
ANSWER:  False
 
73. Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.
 a. True
 b. False
 
ANSWER:  True
 
74. To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.
 a. True
 b. False
 
ANSWER:  True
 
75. To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward of excess charitable contributions of a particular year to other years.
 a. True
 b. False
 
ANSWER:  True
 
76. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
 a. True
 b. False
 
ANSWER:  True
 
77. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain in the year the installment sale occurs.
 a. True
 b. False
 
ANSWER:  False
 
78. Stealth taxes have the effect of generating additional taxes from all taxpayers.
 a. True
 b. False
 
ANSWER:  False
 
79. A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.
 a. True
 b. False
 
ANSWER:  False
 
80. As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase) the amount of the standard deduction allowed to individual taxpayers.
 a. True
 b. False
 
ANSWER:  False
 
81. In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.
 a. True
 b. False
 
ANSWER:  False
 
82. On occasion, Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S. Supreme Court.
 a. True
 b. False
 
ANSWER:  True
 
83. Ultimately, most taxes are paid by individuals.
 a. True
 b. False
 
ANSWER:  True
 
84. The majority of IRS audits are handled by correspondence.
 a. True
 b. False
 
ANSWER:  True
 
85. Sally’s neighbor often brags that his employer often pays him in cash “off the books” to save him taxes. Sally is tired of hearing this and contacts the IRS to report the neighbor. If this tip results in taxes collected by the IRS, Sally will likely receive an award of a portion of the tax and penalties collected.