53 Free Test Bank for Principles of Taxation for Business and Investment Planning 17th 2014 Edition by Jones

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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.

The city of Mayfield charges individuals convicted of DWI (driving while intoxicated) $500 for the first conviction and $2,000 for any subsequent conviction. These charges are an example of a(n):

•  A. User's fee
•  B. Transaction-based tax
•  C. Activity-based tax
•  D. Government penalty

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.

A sales tax can best be described as a(n):

•  A. Consumption tax
•  B. Income tax
•  C. Activity tax
•  D. Ad valorem tax.

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.

Acme Inc.'s property taxes increased by $65,000 this year. As a result, Acme increased the sale prices of its products to generate $65,000 more revenue. Who bears the incidence of the corporate tax increase?

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

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,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 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.

The state of Virginia charges motorists 50 cents for every trip across a toll bridge over the James River. This charge is an example of a(n):

•  A. User's fee
•  B. Transaction-based tax
•  C. Activity-based tax
•  D. Excise tax

The incidence of a state sales tax levied on the purchase of retail goods is:

•  A. Borne by the ultimate consumer of the goods.
•  B. Borne by the seller who must collect and remit the tax.
•  C. Borne by the manufacturer of the goods.
•  D. Borne by the government that levies the tax.

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 concerning property taxes is false?

•  A. Property taxes are ad valorem taxes.
•  B. Property taxes are the primary source of revenue for local governments.
•  C. Property taxes can be levied on realty or personalty.
•  D. None of the above is false.

The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr. Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the incidence of the property tax increase?

•  A. Mr. Janey
•  B. Ms. Lacey
•  C. Both Mr. Janey and Ms. Lacey
•  D. Neither Mr. Janey nor Ms. Lacey

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 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.

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,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.