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307exam1 - Name Class Date ID A BUSA307 Federal Taxation...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 BUSA307 - Federal Taxation, Sample Exam 1 Chapters 1-5 True/False Indicate whether the statement is true or false. ____ 1. Julie inherits her mother’s personal residence, which she converts to a furnished rent house. This change should affect the amount of ad valorem property taxes levied on the properties. ____ 2. Julius, a married taxpayer, makes gifts to each of his six children. Only six per donee annual exclusions will be allowed as to these gifts. ____ 3. The due dates for filing state income tax returns most often are the same as the due date of the Federal income tax return. ____ 4. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year. ____ 5. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is reduced by the amount of the failure to pay penalty. ____ 6. 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. ____ 7. As it is consistent with the wherewithal to pay concept, the tax law permits a seller to recognize gain in the year the installment sale took place. ____ 8. The 1954 Code codification substantially changed the tax law existing on the date of its enactment. ____ 9. Regular decisions of the Tax Court generally involve novel issues previously resolved by the U.S. Tax Court. ____ 10. The following citation cannot be correct: Jack D. Carr , T.C. Memo. 1985-19. ____ 11. Online research systems are generally less costly than CD-ROM services. ____ 12. Kim, a citizen of Korea, is a resident of the U.S. Any income Kim receives from land he owns in Korea is not subject to the U.S. income tax. ____ 13. An increase in the amount of a taxpayer’s AGI can reduce the amount of medical expenses allowed as a deduction. ____ 14. Darren, age 20 and not disabled, earns $4,500 during 2006. Darren’s parents cannot claim him as a dependent unless he is a full-time student. ____ 15. Stealth taxes are directed at higher income taxpayers. ____ 16. When the kiddie tax applies, the child need not file an income tax return as the child’s income will be reported on the parents’ return. ____ 17. Regardless of the standard deduction and exemption amounts, a self-employed individual with net earnings of $400 or more from a business or profession must file a Federal income tax return. ____ 18. In 2006, Tony is a widower and maintains a household in which he and his unmarried daughter, Marie, live. If Marie is not Tony’s dependent, he cannot claim head of household filing status. ____ 19. On June 30, 2006, an accrual basis taxpayer sold a contract to provide the same service each month for 36 months, July 2006 through June 2009. The contract price received was $3,600. The taxpayer may recognize $600 gross income in 2006 and $3,000 in 2007.
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Name: ________________________ ID: A 2
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