South-Western Federal Taxation 2017 Comprehensive, 40th Edition by William H. Hoffman -Test bank

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South-Western Federal Taxation 2017 Comprehensive, 40th Edition by William H. Hoffman -Test bank

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WITH ANSWERS
South-Western Federal Taxation 2017 Comprehensive, 40th Edition by William H. Hoffman -Test bank

Chapter_02_Working_with_the_Tax_Law

1. Rules of tax law do not include Revenue Rulings and Revenue Procedures.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Rules of tax law do include Treasury Department pronouncements.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

2. A tax professional need not worry about the relative weight of authority within the various tax law sources.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The relative weight of authority is critical
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPROG: Technology: Technology: BUSPROG: Technology
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

3. In recent years, Congress has been relatively successful in simplifying the Internal Revenue Code.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Each year the Code becomes more and more complex.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPROG: Technology: Technology: BUSPROG: Technology
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

4. A taxpayer should always minimize his or her tax liability.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   A taxpayer should maximize the after-tax return in conjunction with the overall economic effect.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPROG: Technology: Technology: BUSPROG: Technology
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

5. The first codification of the tax law occurred in 1954.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The first codification of the tax law occurred in 1939.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPROG: Technology: Technology: BUSPROG: Technology
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

6. The Code section citation is incorrect: 212(1).

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Some Code sections omit the subsection and use paragraph designation as the first subpart as does  212.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

7. Subchapter D refers to the Corporate Distributions and Adjustments section of the Internal Revenue Code.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The correct subchapter for Corporate Distributions and Adjustments is Subchapter C.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

8. Regulations are generally issued immediately after a statute is enacted.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The reverse is true. Regulations require time to be issued and may never be issued on a particular statutory change in a Code section.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

9. Temporary Regulations are only published in the Internal Revenue Bulletin.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   They are published in the Federal Register and the Internal Revenue Bulletin.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

10. Revenue Rulings issued by the National Office of the IRS carry the same legal force and effect as Regulations.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   They do not contain the same legal force as Regulations. That is, the legal force is less.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

11. A Revenue Ruling is a judicial source of Federal tax law.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   A Revenue Ruling is an administrative source.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

12. The following citation can be a correct citation: Rev. Rul. 95-271,1995-64 I.R.B. 18.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The citation given refers to the Bulletin issued in the 64th week of 1995. Because a year contains only 52 weeks, the citation cannot be correct.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

13. Revenue Procedures deal with the internal management practices and procedures of the IRS.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

14. Post-1984 letter rulings may be substantial authority for purposes of the accuracy-related penalty in  6662.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

15. A letter ruling applies only to the taxpayer who asks for and obtains a letter ruling.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

16. The IRS is not required to make a letter ruling public.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The law now requires the IRS to make letter rulings available for public inspection after identifying details are deleted.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

17. Determination letters usually involve finalized transactions.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

18. Technical Advice Memoranda deal with completed transactions.

  a. True
  b. False

 

ANSWER:   True
RATIONALE:   TAMs deal with completed transactions.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

19. Technical Advice Memoranda may not be cited as precedents by taxpayers.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

20. A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S. Court of Federal Claims. Only in the Tax Court can jurisdiction be obtained without first paying the assessed tax deficiency.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

21. In a U.S. District Court, a jury can decide both questions of fact and questions of law.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Questions of law are resolved by the presiding judge.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

22. Three judges will normally hear each U.S. Tax Court case.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Most Tax Court cases are heard and decided by only one judge. Only when more important or novel tax issues are involved will the entire court decide the case.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

23. A taxpayer can obtain a jury trial in the U.S. Tax Court.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   A jury trial is available only in a U.S. District Court.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

24. A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S. District Court.

  a. True
  b. False

 

ANSWER:   True
RATIONALE:   The tax deficiency must be paid before suit can be instituted in either the U.S. District Court or the U.S. Court of Federal Claims.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

25. Arizona is in the jurisdiction of the Eighth Circuit Court of Appeals.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Arizona is in the jurisdiction of the Ninth Circuit.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

26. Texas is in the jurisdiction of the Second Circuit Court of Appeals.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Texas is in the jurisdiction of the Fifth Circuit.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

27. The Golsen rule has been overturned by the U.S. Supreme Court.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The Golsen rule is followed by the U.S. Tax Court.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

28. The granting of a Writ of Certiorari indicates that at least four members of the Supreme Court believe that an issue is of sufficient importance to be heard by the full court.

  a. True
  b. False

 

ANSWER:   True
RATIONALE:   The granting of the Writ indicates that at least four members of the Supreme Court believe that an issue is of sufficient importance to be heard by the full Court.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

29. The petitioner refers to the party against whom a suit is brought.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The defendant is the party against whom a suit is brought.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

30. The term petitioner is a synonym for defendant.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The term petitioner is a synonym for plaintiff.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

31. The U.S. Tax Court meets most often in Washington, D.C.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Tax Court judges travel to various cities.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

32. There are 11 geographic U.S. Circuit Court of Appeals.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

33. The following citation is correct: Larry G. Mitchell, 131 T.C. 215 (2008).

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

34. The IRS issues an acquiescence or nonacquiescence only for regular Tax Court decisions.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   After 1990, the IRS issues its acquiescence program for other civil tax cases.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

35. There is a direct conflict between a Code section adopted in 2008 and a treaty with France (signed in 2012). The Code section controls.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   The most recent item takes precedence.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

36. The Index to Federal Tax Articles (published by Warren, Gorham, and Lamont) is available in print and electronic formats.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   It is available only in print form.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

37. A U.S. District Court is the lowest trial court.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

38. The research process should always begin with a tax service.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   If the research is simple, a researcher may start with the Code or Regulations.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-03 LO: 2-03
NATIONAL STANDARDS:   United States BUBUSPROG: Analytic BUSPROG: Analytic
United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Leverage Technology
United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

39. Electronic databases are most frequently searched by the keyword approach.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

40. The test for whether a child qualifies for dependency status is first conducted under the qualified child requirement.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

41. A Bluebook opinion is substantial authority for purposes of the accuracy related penalty.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-03 LO: 2-03
NATIONAL STANDARDS:   United States BUBUSPROG: Analytic BUSPROG: Analytic
United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Leverage Technology
United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

42. The primary purpose of effective tax planning is to reduce or defer the tax in the current tax year.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   This is a secondary tax objective.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

43. Deferring income to a subsequent year is considered to be tax avoidance.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

44. Tax planning usually involves a completed transaction.

  a. True
  b. False

 

ANSWER:   False
RATIONALE:   Tax planning usually involves a proposed transaction.
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 1 min.

 

45. The Regulation section of the CPA exam is approximately 60% Taxation and 40% Law & Professional Responsibilities.

  a. True
  b. False

 

ANSWER:   True
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 1 min.

 

46. The Internal Revenue Code was first codified in what year?

  a. 1913
  b. 1923
  c. 1939
  d. 1954
  e. 1986

 

ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

47. Tax bills are handled by which committee in the U.S. House of Representatives?

  a. Taxation Committee
  b. Ways and Means Committee
  c. Finance Committee
  d. Budget Committee
  e. None of these

 

ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

48. Federal tax legislation generally originates in what body?

  a. Internal Revenue Service
  b. Senate Finance Committee
  c. House Ways and Means Committee
  d. Senate Floor
  e. None of these

 

ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

49. Subtitle A of the Internal Revenue Code covers which of the following taxes?

  a. Income taxes
  b. Estate and gift taxes
  c. Excise taxes
  d. Employment taxes
  e. All of these

 

ANSWER:   a
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

50. In 212(1), the number (1) stands for the:

  a. Section number.
  b. Subsection number.
  c. Paragraph designation.
  d. Subparagraph designation.
  e. None of these.

 

ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

51. Which of these is not a correct citation to the Internal Revenue Code?

  a. Section 211
  b. Section 1222(1)
  c. Section 2(a)(1)(A)
  d. Section 280B
  e. All of these are correct cites.

 

ANSWER:   e
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

52. Which of the following is not an administrative source of tax law?

  a. Field Service Advice
  b. Revenue Procedure
  c. Technical Advice Memoranda
  d. General Counsel Memorandum
  e. All of these are administrative sources.

 

ANSWER:   e
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 2 min.

 

53. Which of the following sources has the highest tax validity?

  a. Revenue Ruling
  b. Revenue Procedure
  c. Regulations
  d. Internal Revenue Code section
  e. None of these

 

ANSWER:   d
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
United States AK AICPA: FN-Risk Analysis
KEYWORDS:   Blooms: Knowledge
OTHER:   Time: 2 min.

 

54. Which of the following types of Regulations has the highest tax validity?

  a. Temporary
  b. Legislative
  c. Interpretive
  d. Procedural
  e. None of these

 

ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
LEARNING OBJECTIVES:   CMPV.SWFT.LO: 2-01 LO: 2-01
NATIONAL STANDARDS:   United States BUSPORG: Analytic
STATE STANDARDS:   United States AK AICPA: FN-Research
KEYWORDS:   Blooms: Comprehension
OTHER:   Time: 2 min.

 

55. Which statement is not true with respect to a Regulation that interprets the tax law?

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  a. Issued by the U.S. Congress.
  b. Issued by the U.S. Treasury Department.
  c. Designed to provide an interpretation of the tax law.
  d. Carries more legal force than a Revenue Ruling.