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ch1 - ch1 2 Student 1 The U.S individual income tax system...

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ch1 2 Student: ___________________________________________________________________________ 1. The U.S. individual income tax system is an example of a progressive tax rate structure. True False 2. A proportional tax rate structure is a tax where the tax rate remains at the same rate regardless of the tax base. True False 3. Under a flat tax, the marginal tax rate and the average tax rate are different. True False 4. State and local taxes levied on either property or sales are examples of progressive taxes. True False 5. With a regressive tax, the tax rate decreases as the tax base gets larger. True False 6. The marginal tax rate is the total tax liability divided by the taxable income. True False 7. The average tax rate is the total tax liability divided by the taxable income. True False 8. All individual income tax returns follow the structure of the simplified tax formula. True False 9. The average tax rate is always smaller than the marginal tax rate. True False 10. At high levels of taxable income, the average tax rate and the marginal tax rate will be the same. True False 11. Wages, salaries, and tips are compensation for services rendered. However, commissions, bonuses, and severance pay are not taxable. True False 12. Federal unemployment compensation benefits are not taxable. True False
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13. A single taxpayer cannot file a Form 1040EZ if she is age 65 or older. True False 14. One of the criteria to file a Form 1040EZ is that the total taxable income of the taxpayer cannot exceed $100,000. True False 15. Employers report wage income to employees on a Form W-3. True False 16. Individuals who file a Form 1040EZ will determine their tax liability with reference to a tax rate schedule. True False 17. Taxpayers normally pay their tax liability when they file their income tax return. True False 18. The amount of tax liability is affected by the filing status of the taxpayer. True False 19. The tax liability of a single individual with taxable income of $31,689 is $4,334. True False 20. Tax liability is calculated using income before permitted deductions. Permitted deductions are then subtracted from the tax liability. True False 21. There are two types of primary tax authority: statutory and judicial. True False 22. Typically, federal tax legislation is introduced in the Senate Finance Committee. True False 23. IRS Regulations are by far the strongest administrative authority. True False 24. A Private Letter Ruling is tax authority only to the taxpayer to whom it is issued. True False 25. One major disadvantage the taxpayer has when filing a petition with the Tax Court is that the IRS's proposed tax assessment must be paid prior to trial. True False
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