69 Free Test Bank for Concepts in Federal Taxation 2013 20th Edition by Murphy

To further support for students’ experience in real business situations, 69 free test bank for Concepts in Federal Taxation 2013 20th Edition by Murphy multiple choice questions  not only introduce updated tax code but also clearly explain the underlying tax concepts to enhance professional practice. Check out all following free questions and answers to be ready for the coming exams.

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Which of the following payments meets the IRS definition of a tax?

•  Sewer fee charged added to a city trash collection bill.
•  A special assessment paid to the county to pave a street.
•  A levy on the value of a deceased taxpayer's estate.
•  Payment of $300 to register an automobile. The $300 consists of a $50 registration fee and $250 based on the weight of the auto.

Shara's 2012 taxable income is $42,000 before considering charitable contributions. Shara is a single individual. She makes a donation of $5,000 to the American Heart Association in December 2012. By how much did Shara's marginal tax rate decline simply because of the donation?

•  0%
•  7%
•  3%
•  5%
•  10%

Greg pays sales tax of $7.20 on the purchase of a lamp for $120. Michelle paid sales tax of $9 on the purchase of a similar lamp for $150. Greg's taxable income for the current year is $40,000. Michelle's taxable income is $55,000. I. The structure of the sales tax is progressive if based on taxable income; II. The structure of the sales tax is proportional if based on sales price.

•  Only statement I is correct.
•  Only statement II is correct.
•  Both statements are correct.
•  Neither statement is correct.

Which of the following payments is a tax? I. Artis paid the IRS a penalty of $475 (above his $11,184 income tax balance due) because he had significantly underpaid his estimated income tax;II. Lindsey paid $135 to the State of Indiana to renew her CPA license; III. Carrie paid a $3.50 toll to cross the Mississippi River; IV. Darnell paid $950 to the County Treasurer's Office for an assessment on his business equipment;

•  Only statement IV is correct.
•  Only statement III is correct.
•  Statements II and IV are correct.
•  Statements I, II, and III are correct.
•  Statements I, II, III, and IV are correct.

When planning for an investment that will extend over several years, the ability to predict how the results of the investment will be taxed is important. This statement is an example of

•  Certainty.
•  Transparency.
•  Equality.
•  Neutrality.
•  Fairness.

Alan is a single taxpayer with a gross income of $88,000, a taxable income of $66,000, and an income tax liability of $12,530. Josh also has $8,000 of tax-exempt interest income. What are Alan's marginal, average, and effective tax rates?

•  25% marginal; 16.9% average; 19.0% effective.
•  28% marginal; 15.9% average; 21.5% effective.
•  28% marginal; 16.9% average; 21.5% effective.
•  25% marginal; 19.0% average; 16.9% effective.

If a taxpayer has a choice of receiving income in the current year versus the following year, which of the following tax rates is important in determining the year in which he should include the income?

•  Average.
•  Effective.
•  Composite.
•  Marginal.

Katie pays $10,000 in tax-deductible property taxes. Katie’s marginal tax rate is 25%, average tax rate is 24%, and effective tax rate is 20%. Katie's tax savings from paying the property tax is:

•  $ 1,600
•  $ 2,000
•  $ 2,400
•  $ 2,500
•  $10,000

A state sales tax levied on all goods and services sold is an example of a

•  progressive tax.
•  regressive tax.
•  proportional tax.
•  value added tax.

According to the IRS definition, which of the following is not a characteristic of a tax?

•  The payment to the governmental authority is required by law.
•  The payment relates to the receipt of a specific benefit.
•  The payment is required pursuant to the legislative power to tax.
•  The purpose of requiring the payment is to provide revenue to be used for the public or governmental purposes.

Bob and Linda are married and have a 2012 taxable income of $280,000. They also received $20,000 of tax-exempt income. Their marginal tax rate is:

•  23.1%
•  24.8%
•  28.0%
•  33.0%
•  35.0%

Terry is a worker in the country Pretoria. His salary is $46,000 and his taxable income is $52,000. Pretoria imposes a Worker Tax as follows: Employers withhold a tax of 20% of all wages and salaries. If taxable income as reported on the employee's income tax return is greater than $50,000, an additional 10% tax is withheld on all income. Terry's marginal tax rate is:

•  0%
•  10%
•  20%
•  30%

Based on the definition given in Chapter 1 of the text, which of the following is a tax? I. A registration fee paid to the state to get a car license plate; II. 2% special sales tax for funding public education; III. A special property tax assessment for installing sidewalks in the taxpayer's neighborhood; IV. An income tax imposed by Chicago on persons living or working within the city limits;

•  Only statement I is correct.
•  Only statement III is correct.
•  Only statement IV is correct.
•  Statements I and IV are correct.
•  Statements II and IV are correct.

The Federal income tax is a

•  revenue neutral tax.
•  regressive tax.
•  value-added tax.
•  progressive tax.
•  form of sales tax.

Which of the following payments meets the IRS definition of a tax?

•  A fee paid on the value of property transferred from one individual to another by gift.
•  A one-time additional property tax assessment to add a sidewalk to the neighborhood.
•  A fee paid on the purchase of aerosol producing products to fund ozone research.
•  A fee for a sticker purchased from a city that must be attached to garbage bags before the city garbage trucks will pick up the bags.
•  All of the above meet the definition of a tax.

Jaun plans to give $5,000 to the American Diabetes Association. Jaun's marginal tax rate is 28%. His average tax rate is 25%. Jaun's after-tax cost of the contribution is

•  $1,250
•  $1,400
•  $3,600
•  $3,750
•  $5,000

Employment taxes are

•  revenue neutral.
•  regressive .
•  value-added.
•  progressive.
•  proportional.

Lee's 2012 taxable income is $88,000 before considering charitable contributions. Lee is a single individual. She makes a donation of $10,000 to the American Heart Association in December 2012. By how much did Lee's marginal tax rate decline simply because of the donation?

•  0%
•  10%
•  3%
•  5%
•  8%

Maria is single and has a 2012 taxable income of $199,800 She also received $15,000 of tax-exempt income. Maria's effective tax rate is:

•  22.8%
•  23.5%
•  25.3%
•  28.0%
•  33.0%

A tax provision has been discussed that would add an additional marginal tax rate of 39% to be applied to an individual's taxable income in excess of $800,000. If this provision were to become law, what overall distributional impact would it have on our current income tax system?

•  Proportional.
•  Regressive.
•  Progressive.
•  Disproportional.
•  None of the above.

Pay-as-you-go withholding is consistent with Adam Smith's criteria of

•  Certainty.
•  Convenience.
•  Economy.
•  Fairness.
•  Transparency.

Jered and Samantha are married. Their 2012 taxable income is $80,000 before considering their mortgage interest deduction. If the mortgage interest totals $10,000 for 2012, what are the tax savings attributable to their interest deduction?

•  $ 1,500
•  $ 2,500
•  $ 2,800
•  $ 3,300
•  $10,000

Adam Smith's concept of vertical equity is found in a tax rate structure that is

•  Regressive.
•  Proportional.
•  Horizontal.
•  Progressive.
•  Economical.

Taxpayer A pays tax of $3,300 on taxable income of $10,000 while taxpayer B pays tax of $6,600 on $20,000. The tax is a

•  proportional tax.
•  regressive tax.
•  progressive tax.
•  horizontal tax.

Which of Adam Smith's requirements for a good tax system best supports the argument that the federal income tax rate structure should be progressive?

•  Certainty.
•  Convenience.
•  Equality.
•  Neutrality.
•  Sufficiency.

Which of the following statement is/are included in Adam Smith’s four requirements for a good tax system? I. Changes in the tax law should be made as needed to raise revenue and for proper administration; II. A tax should be imposed in proportion to a taxpayer's ability to pay;; III. A taxpayer should be required to pay a tax when it is most likely to be convenient for the taxpayer to make the payment; IV. The government must collect taxes equal to it’s expenses;

•  Statements I and II are correct.
•  Statements I and IV are correct.
•  Statements II and III are correct.
•  Statements II and IV are correct.
•  Statements III and IV are correct.

Andrea is single and has a 2012 taxable income of $199,800 She also received $15,000 of tax-exempt income. Andrea's average tax rate is:

•  22.8%
•  23.5%
•  25.3%
•  28.5%
•  33.0%