Acct 323-Midterm Exam-answers

Acct 323-Midterm Exam-answers - University of Maryland...

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University of Maryland University College School Of Undergraduate Studies Taxation of Individuals (ACCT323-6982) Midterm Exam March 16-22, 2009 \ Name: Please answer all questions on the exam booklet by circling the correct answer. All questions will carry equal weight. Time: 2 Hrs ************************************************************ 1
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1. 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. A user's fee B. A transaction-based tax C. An activity-based tax D. A government penalty 2. 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 3. Mr. Bilboa is a citizen of Portugal. Which of the following statements is true ? A. The U.S. government has no jurisdiction to tax Mr. Bilboa because he is not a U.S. citizen B. The U.S. government has jurisdiction to tax Mr. Bilboa if he is a permanent resident of the United States C. The U.S. government has jurisdiction to tax Mr. Bilboa if he earns income from a business he operates in Florida D. Both b and c are true 4. 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 Portugal 5. 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 6. 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 7. 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 2
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8. The federal income tax law allows individuals whose property is destroyed by a natural disaster such as a fire or hurricane to reduce their taxable income by the amount of their financial loss. This rule is intended to improve the:
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Acct 323-Midterm Exam-answers - University of Maryland...

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