53 Free Test Bank for Principles of Taxation for Business and Investment Planning 16th Edition by Jones

53 free test bank for Principles of Taxation for Business and Investment Planning 16th Edition by Jones multiple choice questions assisst strongly grasping of the fundamental principles of taxation rules. Not only this test but also our other free fast-response accounting of taxation question banks are offered and prepared carefully to help students comprehend the framework of the tax system, making the tax code easier to understand. Only click following questions and view available answers to make this study more accessible.

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Which type of tax is not levied by the federal government?

•  A.Corporate income tax
•  B.Individual income tax
•  C.Employment taxes
•  D.General sales tax

Mr. Smith resides in a state with a 6% sales and use tax. He recently traveled to another state to buy furniture and paid that state's 7% sales tax. Which of the following statements is true?

•  A.Mr. Smith is entitled to a refund of 1% of the purchase price of the sailboat.
•  B.Mr. Smith does not owe a use tax to his home state.
•  C.Mr. Smith's use tax liability to his home state equals 6% of the purchase price of the sailboat.
•  D.None of the above is true.

Which of the following statements about the Internal Revenue Code is false?

•  A.The Internal Revenue Code has not been amended since 1986.
•  B.The Internal Revenue Code is part of federal statutory law.
•  C.The Internal Revenue Code consists of numerically organized sections.
•  D.Only Congress has the authority to amend the Internal Revenue Code.

Which of the following is not considered administrative authority?

•  A.Treasury regulations
•  B.Revenue rulings
•  C.Tax Court decisions
•  D.All of the above are administrative authorities

Which of the following taxes is a significant source of revenue for local governments?

•  A.Real property tax
•  B.Employment tax
•  C.Income tax
•  D.None of the above

Which of the following is/are not a primary source of authority for the tax law?

•  A.A revenue ruling published by the Internal Revenue Service
•  B.Section 162 of the Internal Revenue Code
•  C.Treasury Reg. §1.351-2
•  D.All of the above are primary sources of authority

Which of the following is not characteristic of a tax?

•  A.A tax is compulsory.
•  B.A tax is intended to punish unacceptable behavior.
•  C.A tax is levied by a government.
•  D.All of the above are characteristics of a tax.

What gives the federal government the right to impose a tax on individual and corporate income?

•  A.Internal Revenue Code of 1986
•  B.Revenue Act of 1913
•  C.Sixteenth Amendment to the U.S. Constitution
•  D.Bill of Rights

Company N operates a mail order business out of its headquarters in Tulsa, Oklahoma. This year, it mailed $892,000 worth of product to customers residing in Oklahoma and $489,300 worth of product to customers residing in Missouri. Which of the following statements is true?

•  A.Company N must collect Oklahoma sales tax from its Oklahoma customers and Missouri sales tax from its Missouri customers.
•  B.Company N must collect Oklahoma sales tax from both its Oklahoma and Missouri customers.
•  C.Company N must collect Oklahoma sales tax from its Oklahoma customers.
•  D.Company D is not required to collect sales tax on any mail order sales.

Which of the following is an example of an activity-based tax?

•  A.A tax on business' net income
•  B.An excise tax
•  C.A gift tax on the transfer of assets by gift
•  D.Both A. and C.

Which of the following characterizes a good tax base?

•  A.The base can be easily expressed in monetary terms.
•  B.Taxpayers cannot easily avoid or conceal the base.
•  C.Taxpayers cannot easily move the base from one jurisdiction to another.
•  D.All of the above characterize a good tax base.

Which of the following federal taxes is not earmarked for a specific purpose?

•  A.Employment taxes
•  B.Unemployment taxes
•  C.Transfer taxes
•  D.All of the above are earmarked taxes.

SJF Inc., which has its corporate offices in Boise, Idaho, conducts business in Idaho, Oregon, California, and British Columbia, Canada. Which of the following statements is true?

•  A.SJF must pay income tax only to Idaho and the United States.
•  B.SJF may be required to pay income tax to Idaho, Oregon, California, British Columbia, the United States, and Canada.
•  C.SJF must pay income tax only to Idaho, Oregon, California, and the United States.
•  D.SJF may be required to pay income tax to either the United States or to Canada, but not to both.

Acme Inc.'s property taxes increased by $19,000 this year. As a result, Acme eliminated $19,000 from its budget for the employee Christmas party. Who bears the incidence of the corporate tax increase?

•  A.Acme Inc.
•  B.Acme's customers.
•  C.Acme's employees.
•  D.Acme's shareholders.

Which of the following is not an advantage of state conformity to federal corporate income tax laws?

•  A.States have control over their corporate income tax revenues.
•  B.States do not have to enact comprehensive corporate income tax statutes.
•  C.Conformity eases the compliance burden of corporate taxpayers.
•  D.All of the above are advantages of state conformity.

Which of the following does not characterize federal transfer taxes?

•  A.The tax is imposed on individuals but not on corporations.
•  B.The tax is based on the value of property transferred by gift or at death.
•  C.The tax is a transaction tax.
•  D.All of the above characterize federal transfer taxes.

Which of the following federal taxes is earmarked for a specific purpose?

•  A.Corporate income tax
•  B.Employment taxes
•  C.Unemployment taxes
•  D.Both B. and C. are earmarked taxes.

Which of the following taxes is a significant source of revenue for state governments?

•  A.General sales tax
•  B.Individual income tax
•  C.Corporate income tax
•  D.All of the above

Which of the following statements regarding tax systems is false?

•  A.A single percentage that applies to the entire tax base is described as a flat rate.
•  B.When designing a tax, governments try to identify tax bases that taxpayers can easily avoid or conceal.
•  C.A tax base is an item, occurrence, transaction, or activity with respect to which a tax is levied.
•  D.With regard to tax systems, the term revenue refers to the total tax collected by the government.

Which of the following statements concerning sales taxes is false?

•  A.Sales taxes apply to the purchase of most types of consumer goods.
•  B.Sales taxes apply to the purchase of most types of consumer services.
•  C.Sales taxes are collected by the seller when the sale is made.
•  D.Sales taxes imposed on the purchaser of retail items are consumption taxes.

Mrs. King is a U.S. citizen who permanently resides in South Africa. Which of the following statements is true?

•  A.The U.S. government has jurisdiction to tax Mrs. King.
•  B.The U.S. government has no jurisdiction to tax Mrs. King because she does not live in the United States.
•  C.The U.S. government has no jurisdiction to tax Mrs. King because she does not earn any income from a source within the United States.
•  D.Mrs. King can elect whether to pay tax to the United States or to South Africa.

The city of Springvale imposes a net income tax on businesses operating within its jurisdiction. The tax equals 1%of income up to $100,000 and 1.5%of income in excess of $100,000. The Springvale Bar and Grill generated $782,000 net income this year. Compute its city income tax.

•  A.$10,230
•  B.$11,230
•  C.$11,730
•  D.None of the above

Which of the following does not characterize federal transfer taxes?

•  A.The tax is imposed on the value of wealth transferred by an individual as a gift.
•  B.The tax is imposed on the value of wealth transferred because of the death of an individual.
•  C.The tax is imposed on the value of wealth transferred by an individual to charity.
•  D.All of the above characterize federal transfer taxes.

Company D, which has its home office in Raleigh, North Carolina, conducts business in the United States, Canada, and Mexico. Which of the following statements is true?

•  A.Because Company D must pay income tax to North Carolina, it is not required to pay tax to any other state.
•  B.Because Company D must pay income tax to North Carolina, it is not required to pay federal income tax.
•  C.Because Company D must pay income tax to the United States, it is not required to pay tax to Canada or Mexico.
•  D.None of the above is true.

Which of the following statements regarding the political process of creating tax law is false?

•  A.The political process contributes to the dynamic nature of the tax law.
•  B.Special interest groups have little effect on the tax legislative process.
•  C.When taxpayers device a new tactic for reducing their tax burdens, governments respond by enacting a new rule to render the tactic ineffective.
•  D.Changes in political philosophy often reflect shifts in the public attitude about the proper role of taxes in society.

Which of the following is an example of a transaction-based tax?

•  A.A tax on net business income
•  B.An excise tax
•  C.An estate tax on the transfer of assets at death
•  D.Both B. and C.

Which of the following statements about sales and use taxes is true?

•  A.If an individual pays a sales tax on the purchase of an item, she will not have to pay a use tax on the purchase.
•  B.An individual must pay both a sales tax and a use tax on the taxable purchase of an item.
•  C.Many states that impose a sales tax do not impose a complementary use tax.
•  D.None of the above is true.

Mrs. Renfru is a Brazilian citizen who permanently resides in Houston, Texas. Which of the following statements is true?

•  A.The U.S. government has no jurisdiction to tax Mrs. Renfru because she is not a U.S. citizen.
•  B.The U.S. government has jurisdiction to tax Mrs. Renfru only on income that she earns from a source within the United States.
•  C.The U.S. government has jurisdiction to tax Mrs. Renfru.
•  D.Mrs. Renfru can elect whether to pay tax to the United States or to Brazil.

Which of the following statements about Treasury regulations is false?

•  A.Treasury regulations are written to interpret and explain the Internal Revenue Code.
•  B.Treasury regulations are part of the statutory law.
•  C.A federal court can invalidate a Treasury regulation if the court concludes that the regulation incorrectly interprets the Internal Revenue Code.
•  D.None of the above is false.

Which of the following taxes is not a significant source of revenue for local governments?

•  A.Real property tax
•  B.Personal property tax
•  C.Employment tax
•  D.All of the above

Which of the following is an earmarked tax?

•  A.A tax imposed on the purchase of specific items such as liquor or cigarettes
•  B.A tax that generates revenues that the government can spend only to build more National Parks
•  C.A tax imposed only on individuals who earn more than $1 million annually
•  D.A tax that generates revenues that the government can spend for any purpose

Which of the following is not characteristic of an excise tax?

•  A.An excise tax is levied on the retail sale of specific goods.
•  B.Excise tax rates typically are higher than general sales tax rates.
•  C.Purchasers of luxury items are responsible for paying any excise tax directly to the government.
•  D.All of the above are characteristics of an excise tax.

Government Q imposes a net income tax on businesses operating within its jurisdiction. The tax equals 3% of income up to $500,000 and 5%of income in excess of $500,000. Company K generated $782,000 net income this year. Compute the income tax that Company K owes to Q.

•  A.$29,100
•  B.$14,100
•  C.$39,100
•  D.None of the above

A revenue ruling is an example of:

•  A.Judicial authority
•  B.Administrative authority
•  C.Legislative authority
•  D.Editorial authority