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在美国交税税收是美国政府赖以生存的财政基础，而个人所得税则是美国政府财政的重要来源。
因此，上到美国总统，下到平民百姓，纳税成为每个人的义务和职责。
美国是根据个人收入情况逐步提高税率，从而以此来减少低收入者的负担和控制高收入者的收入过快增长。
最基本的原则是多收入多交税，收入低的先交税，后退税。
以下简要说明留学生和美国永久居民的交税情况，税率等依据纽约州规定。
F-1 学生签证报税1.CPT期间收入持有F-1签证的留学生，在下列情况下享有免报税：1）每周最多20小时（暑假40小时）的校园（on-campus）工作；2）USCIS批准的校园外（off-campus）工作；3）社会实践（Practical Training）。
特别注意的是所有工作必须被美国移民局（USCIS）批准，与专业相关。
如果CPT期间身份发生转变，则也不能享受免报税。
2.无收入F-1 OPT目前在美国的留学生（F-1）、学者（J-1），无正式收入，只需要填写Form 8843（个人资料说明书）证明自己在美国的身份即可。
无需报税的收入：奖学金，学费见面，非商业用途的银行存款利息，购物时的现金或支票的返利（Cash/Check Refund），信用卡积分换礼等等。
德克萨斯州财务部：Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215寄送日期：6月15日之前问：什么是Substantial Presence Test（实质性存在检测）?答：如果根据条件满足居住在美国183天，留学生或学者则应该作为美国居民报税。
以下是满足条件：1）本年度居住满31天；2）包括本年的连续三年居住时间满183天。
具体计算公式：本年度居住时长+前一年居住时长×⅙+连续三年中的第一年居住时长×⅓。
问：如果不填写Form 8843，会有什么后果么？答：一般来说，您所有在美天数可能都被用来进行实质性存在检测，即被视为美国居民纳税的机会增加，您的全球收入都将可能被征税。
美国博士后报税和退税入门指南根据美国的法律，不论是居民外籍人士（Resident Alien），还是非居民外籍人士（Nonresident Alien）都需要在美国报税。
根据中美政府协议，中国博士后初到美国的前三年免税，根据各学校的人事要求不同，可以在入职时办理免税申请，也可在每年年初报税时申请前一年的退税。
因为美国报税情况记录入个人征信，所以一些学校会鼓励博士后报税。
美国的纳税体系是建立在个人申报的基础上。
纳税人自己负责汇总资料，填写和提交报税表。
据纳税人类型及收入差异，需填报的报税表也不尽相同。
我们在此为您简单介绍美国博士后报税的细节及注意事项。
一、概述在美国联邦国税局（IRS）的要求下，雇主需要在每年的1月底之前向正式雇员（Employee）寄出他们在上一年度的工资情况表以帮助雇员完成上一年度的纳税申报。
这里的工资情况表就是W-2表格。
除了雇主，其他收入来源也会向纳税人邮寄报税表格，包括银行、股票经济、失业局等。
美国工资表W-2W-2表格总共有6页，分别是Copy A，B，C，D，1，2。
其中CopyA，D由雇主保留，Copy B，C，1，2将送给雇员填写。
表格的主要身份信息包括：雇员的社会安全号码（Social Security number，SSN），雇主税务号（Employer Identification Number，EIN），雇员姓名、地址等信息。
由表格可看出，在雇员的工资及福利总额的基础上，雇主代为缴纳了联邦收入税（Federal income tax withheld）、社会保障税（Social security tax withheld）、医疗保险税（Medicare tax withheld）、州税（State income tax）、地税（Local income tax）等。
在美国，工资单上的联邦税、州税、个人所得税等是预扣的，真正的扣税数值需要等到报税的时候才知道。
英文回答：In order to apply for the low-ie assistance scholarship in the state of New York, prospective students mustmence the process bypleting the Free Application for Federal Student Aid (FAFSA). The FAFSA serves as the determinant for a student's eligibility for both federal and state financial aid programs, inclusive of the Tuition Assistance Program (TAP) and other state-issued scholarships. The application window for the FAFSA traditionallymences on October 1st of each year, and it is strongly rmended that students submit their applications at their earliest convenience to optimize their likelihood of securing financial aid. It is imperative that all requisite documentation, such as tax returns and bank statements, bepiled prior tomencing the application process. Upon submission of the FAFSA, students will be supplied with a Student Aid Report (SAR) outlining their financial particulars, including their Expected Family Contribution (EFC), which is pivotal in ascertaining eligibility for need-based financial aid programs.为了申请纽约州低额援助奖学金，未来学生必须加入联邦学生援助免费申请程序。
美国移民局如何判断美国EB-5投资移民投资人是否创造就业
移民局是通过经济模型（RIMS II, IMPLAN, REDYN）来计算出就业人数的。
移民局在审核创造就业时，是按照经济分析报告中的投入（花费）产出模型来审核的。
打个比方，一场会议，每人收取门票5元，若会议结束后总收入为500元，即默认到场人数100人，移民局的审理也是这样。
因此，在I-829审核时，如果经济分析报告中使用建筑花费来计算创造就业，那么只要提供文件证明项目资金已全部投入到项目建设；同时，如果使用了运营收益来计算创造就业，则需额外提供文件证明项目已达到经济分析报告中的运营收益。
W-8BEN-美国预提税及申报受益所有⼈之外国⼈⾝份证明（个W-8BEN-美国预提税及申报受益所有⼈之外国⼈⾝份证明（个⼈）每位户⼝持有⼈必须填写⼀份表格。
W-8BEN表格必须准确填写，不得涂改。
如果填写有误，请⽤新表格重新填写。
请勿使⽤涂改液或其他涂改⼯具。
所有W-8BEN表格均必须以英⽂填写。
甲.请详阅本节和相关指引，确保使⽤正确的W-8BEN表格。
⼄.第⼀部分（受益所有⼈⾝份）1.请填写您的姓名2.请填写您的国籍3.于第⼀⾏填写完整的街道地址，于第⼆⾏填写城市或城镇、州或省，包括邮政编码。
所填地址应与⾹港⼀卡通所留住宅地址相同。
请勿使⽤：邮政信箱或代收地址、第三⽅姓名、⾦融机构或美国地址。
4.如果您的邮寄地址与永久居住地址不同，才需填写邮寄地址。
注意：如果填写美国邮寄地址，必须书⾯说明使⽤美国邮寄地址的原因。
如果填写的国家与永久居住地所在国家不同，也必须书⾯说明原因。
5.如果您是美国纳税⼈，请填写您的美国纳税⼈识别号码(TIN)。
该号码为您的社会保障号码(SSN)或个⼈纳税⼈识别号码(ITIN)。
有效的纳税⼈识别号码应由9个数字组成。
纳税⼈识别号码不会：（1）含有数字以外的内容，（2）少于或超过9个数字，（3）含有9个相同的数字，或（4）含有9个顺序排列的数字（⽆论升序还是降序）。
6.请填写您在美国以外的税务识别号码。
如果没有外国税务识别号码，请转⾄第8栏。
7.请勿填写户⼝号码，否则表格将仅限于所列户⼝使⽤，您可能须为其他户⼝另外填写表格。
8.请填写您的出⽣⽇期（需按⽉⽉-⽇⽇-年年年年格式填写）丙.第⼆部分（申请税务协定利益）9.仅当您是协定国居民（与美国有签订所得税协定的国家的居民）并有权申请税务协定利益，即您收到源⾃美国的固定或可确定年度或定期（FDAP）收⼊（如股息）时，才需填写本节内容。
如果对您是否有资格申请税务协定利益存有疑问，我们建议您寻求独⽴税务意见。
10.与第9栏说明相同。
2019美国留学生报税指南（一）一、美国个人报税时间每年个人报税截至日期为4月15日，如果遇到周末，顺延到下一个工作日。
如果无法在4月15日前提交税表，可以申请延期，报税截至日期顺延到10月15日。
申请延期一定要在4月15日之前分别递交联邦和州两份延期表，不然会有罚款。
申请延期时应把预计的当年欠税款提前缴交，可适当多交一些，最后报税时会多退少补，不然即使你做了延期仍会有罚款。
报税开始时间，由于公司寄出W2和1099表格的截至日期为每年的1月31日，大部分人会在2月左右收到W2和1099，也就意味着你可以开始报税了。
二、我需不需要报税？应税收入包括哪些？无论是美国居民还是外国人，只要在美国取得收入就需要报税。
美国税务居民用1040税表报税，非居民（Nonresident Alien）用1040NR税表报税。
应税收入包括W2、1042S上的劳动所得、银行利息、股票分红、资本利得、K1公司经营利得、房屋租金、1099-Misc自雇收入等。
这里要特别提醒一下广大留学生，由于受移民法的限制，留学生只能从事和自己学习领域相关的工作，不能随心所欲的自雇。
如果顺手在Amazon上卖点东西、放学顺路开Uber、在Airbnb上出租房子、未申请工作许可就兼职等，都会收到1099-Misc，从而违反移民法，置自己于不利处境。
我们收到过太多惊慌失措、悔不当初的留学生来信。
如果持有F、J、M、Q等非移民签证，并且没有收入，则无需填写税表，只要每年寄出一份8843表格即可。
2018年之前美国非居民税表上有4050美元的个人免税额（Personal Exemption），即如果你的W2、1042S上的收入低于4050美元，可以不报税。
但是2018年开始个人免税额已被取消。
这意味着非居民哪怕只有1美元的收入都需填报税表。
三、不报税有什么危害？报税又有什么好处？在美国税表是一个人的财务证明，非常重要，当你申请绿卡、公民入籍、贷款买房买车、上大学申请奖学金、申请退休金、办医疗保险卡、申请社会福利、申请国内亲属移民美国等等时候，都需要查验税表。
2024考研法硕真题：税法学英文版2024 Postgraduate Entrance Exam LLM Tax Law (Complete Version)In 2024, the postgraduate entrance exam for LLM candidates included a comprehensive section on tax law. This section covered various aspects of tax law, including principles, regulations, and case studies. The exam aimed to test candidates' understanding of tax law and their ability to apply it in real-life scenarios.Candidates were required to demonstrate their knowledge of tax law principles, such as taxation theories, tax structure, and tax planning strategies. They were also tested on their understanding of tax regulations, including tax policies, tax rates, and tax incentives. In addition, candidates were presented with case studies that required them to analyze complex tax issues and propose solutions based on their understanding of tax law.Overall, the 2024 LLM tax law exam was designed to evaluate candidates' proficiency in tax law and their ability to think critically and analytically in applying tax law principles to practical situations. It was a challenging but rewarding test that allowed candidates to showcase their expertise in tax law and demonstrate their readiness for a career in the field of taxation.。
中国银行机构税收居民身份声明英文China Banking Institution Tax Resident Identity DeclarationIn accordance with the tax laws and regulations of the People's Republic of China, individuals who qualify as tax residents are required to make a declaration to their banking institutions. This declaration confirms their tax residency status and helps the institutions comply with their obligations under the law.As a customer of China Bank, it is important for you to understand the concept of tax residency and the implications it has on your banking transactions. In this document, we will provide you with information on how to determine your tax residency status and how to make a tax resident identity declaration to China Bank.What is Tax Residency?Tax residency refers to the jurisdiction in which an individual is liable to pay taxes on their worldwide income. In China, an individual is considered a tax resident if they meet any of the following criteria:1. They have a registered permanent residence in China.2. They reside in China for a period exceeding 183 days in a calendar year.3. They are domiciled in China.If you fall under any of these criteria, then you are considered a tax resident of China and are required to comply with the tax laws and regulations of the country.Why is Tax Residency Declaration Important?Making a tax resident identity declaration to China Bank is important for two main reasons:1. Compliance with Tax Laws: By declaring your tax residency status, you ensure that China Bank has accurate information about your tax obligations. This helps the bank comply with its reporting requirements to the tax authorities.2. Tax Treaties and Agreements: China has tax treaties and agreements with various countries to avoid double taxation. By declaring your tax residency status, you may be eligible for certain tax benefits and exemptions under these agreements.How to Make a Tax Resident Identity Declaration to China Bank?If you believe that you qualify as a tax resident of China, you can make a tax resident identity declaration to China Bank by following these steps:1. Download the Tax Resident Identity Declaration Form from the China Bank website or visit your nearest branch to collect a physical copy.2. Fill out the form with accurate and up-to-date information about your tax residency status.3. Submit the completed form to your relationship manager or any customer service representative at China Bank.4. Upon receiving your declaration, China Bank will update its records accordingly and notify you of any further actions required.It is important to note that failure to make a tax resident identity declaration to China Bank may result in penalties or sanctions imposed by the tax authorities.ConclusionAs a responsible citizen, it is important to comply with the tax laws and regulations of your country. By making a tax resident identity declaration to China Bank, you are not onlyfulfilling your legal obligations but also ensuring that your banking transactions are in line with the requirements of the law.If you have any questions or need assistance with your tax resident identity declaration, please do not hesitate to contact your relationship manager or visit your nearest China Bank branch. We are here to help you navigate the complexities of tax residency and ensure that your financial affairs are in order. Thank you for your cooperation.。
Prentice Hall's Federal Taxation 2013 Individuals, 26e (Pope)Chapter I1 An Introduction to Taxation1) The tax law encompasses administrative and judicial interpretations, such as Treasury regulations, revenue rulings, revenue procedures, and court decisions, as well as statutes.Answer: TRUEPage Ref.: I:1-24Objective: 62) Generally, tax legislation is introduced first in the Senate and referred to the Senate Finance Committee. Answer: FALSEExplanation: A tax bill is introduced in the House and referred to the Ways and Means Committee.Page Ref.: I:1-24Objective: 73) The Internal Revenue Service is the branch of the Treasury Department responsible for administering the federal tax law.Answer: TRUEPage Ref.: I:1-26Objective: 84) Generally, the statute of limitations is three years from the later of the date the tax return is filed or the due date.Answer: TRUEPage Ref.: I:1-28Objective: 85) Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is aA) progressive tax.B) proportional tax.C) regressive tax.D) None of the above.Answer: BExplanation: B) The tax rate is proportional because the 10% tax rate applies to both taxpayers regardless of their income level.Page Ref.: I:1-4; Example I:1-3Objective: 26) Which of the following taxes is progressive?A) sales taxB) excise taxC) property taxD) income taxAnswer: DExplanation: D) The income tax rates increase as a taxpayer's taxable income rises.Page Ref.: I:1-47) Which of the following taxes is proportional?A) gift taxB) income taxC) sales taxD) Federal Insurance Contributions Act (FICA)Answer: CExplanation: C) A sales tax is assessed at a fixed rate of the purchase amount, based on state and local law.Page Ref.: I:1-4 and I:1-11; Topic Review I:1-1Objective: 28) Which of the following taxes is regressive?A) Federal Insurance Contributions Act (FICA)B) excise taxC) property taxD) gift taxAnswer: AExplanation: A) For upper income wage earners, the Social Security tax ceases at a maximum wage base. For 2012, wages over $110,100 are not subject to the Social Security tax.Page Ref.: I:1-4 and I:1-11; Topic Review I:1-1Objective: 29) Sarah contributes $25,000 to a church. Sarah's marginal tax rate is 35% while her average tax rate is 25%. After considering her tax savings, Sarah's contribution costsA) $6,250.B) $8,750.C) $16,250.D) $18,750.Answer: CExplanation: C) [$25,000 × (100% - 35%)] = $16,250Page Ref.: I:1-5; Example I:1-4Objective: 210) Helen, who is single, is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest. If her marginal tax rate is 25% and her effective tax rate is 20%, what is the amount of Helen's tax savings from purchasing the residence?A) $5,600B) $7,000C) $21,000D) $22,400Answer: BExplanation: B) $28,000 × .25 marginal rate = $7,000 tax savings.Page Ref.: I:1-5; Example I:1-4Objective: 211) Charlotte pays $16,000 in tax deductible property taxes. Charlotte's marginal tax rate is 28%, effective tax rate is 22% and average rate is 25%. Charlotte's tax savings from paying the property tax isB) $4,000.C) $4,480.D) $11,520.Answer: CExplanation: C) $16,000 × 0.28 = $4,480Page Ref.: I:1-5; Example I:1-4Objective: 212) Anne, who is single, has taxable income for the current year of $38,000 while total economic income is $43,000 resulting in a total tax of $5,625. Anne's average tax rate and effective tax rate are, respectively,A) 14.80% and 13.08%.B) 13.08% and 14.80%.C) 11.58% and 13.08%.D) 14.80% and 13.65%.Answer: AExplanation: A) $5,625 ÷ $38,000 = 0.1480$5,625 ÷ $43,000 = 0.1308Page Ref.: I:1-6; Example I:1-5Objective: 213) The unified transfer tax systemA) imposes a single tax upon transfers of property during an individual's lifetime only.B) imposes a single tax upon transfers of property during an individual's life and at death.C) imposes a single tax upon transfers of property only at an individual's death.D) none of above.Answer: BExplanation: B) The gift (transfers during life) tax and estate (transfers after death) tax systems are unified.Page Ref.: I:1-7Objective: 314) When property is transferred, the gift tax is based onA) replacement cost of the transferred property.B) fair market value on the date of transfer.C) the transferor's original cost of the transferred property.D) the transferor's depreciated cost of the transferred property.Answer: BExplanation: B) The gift tax is based on the property's fair market value on the date of transfer.Page Ref.: I:1-8Objective: 315) Paul makes the following property transfers in the current year:• $22,000 cash to his wife• $34,000 cash to a qu alified charity• $220,000 house to his son• $3,000 computer to an unrelated friendThe total of Paul's taxable gifts, assuming he does not elect gift splitting with his spouse, subject to theunified transfer tax isA) $207,000.B) $223,000.C) $245,000.D) $279,000.Answer: AExplanation: A) $220,000 - $13,000 = $207,000. The gift to the unrelated friend is below the $13,000 annual gift tax exclusion. The gifts to his wife and to the charity are not subject to gift tax.Page Ref.: I:1-8; Example I:1-6Objective: 316) Charlie makes the following gifts in the current year: $40,000 to his spouse, $30,000 to his church, $18,000 to his nephew, and $25,000 to a friend. Assuming Charlie does not elect gift splitting with his wife, his taxable gifts in the current year will beA) $13,000.B) $17,000.C) $25,000.D) $40,000.Answer: BExplanation: B) ($18,000 - $13,000) + (25,000 - $13,000) = $17,000. The gift to his spouse and the charitable gift are not subject to gift taxes.Page Ref.: I:1-8; Example I:1-6Objective: 317) Shaquille buys new cars for five of his friends. Each car cost $70,000. What is the amount of Shaquille's taxable gifts?A) $0B) $285,000C) $337,000D) $350,000Answer: BExplanation: B) (5 × $70,000) - (5 × $13,000) = 285,000Page Ref.: I:1-8; Example I:1-6Objective: 318) In 2012, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceedsA) $1,500,000.B) $2,000,000.C) $3,500,000.D) $5,000,000.Answer: DExplanation: D) The unified credit equivalent for estate and gift taxes is $ 5,000,000 for 2011.Page Ref.: I:1-9; Example I:1-7Objective: 319) Eric dies in the current year and has a gross estate valued at $6,500,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000. Ericbequeaths $600,000 to his wife. Eric made no taxable transfers during his life. Eric's taxable estate will beA) $550,000.B) $5,550,000.C) $6,150,000D) $6,500,000.Answer: BExplanation: B) ($6,500,000 - $100,000 - $250,000 - $600,000) = $5,550,000Page Ref.: I:1-10; Example I:1-8Objective: 320) Thomas dies in the current year and has a gross estate valued at $3,000,000. During his lifetime (but after 1976) Thomas had made taxable gifts of $400,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Thomas' debts which amount to $300,000. Thomas bequeaths $500,000 to his wife. What is the amount of Thomas' tax base, the amount on which the estate tax is computed?A) $2,100,000B) $2,500,000C) $2,600,000D) $3,400,000Answer: BExplanation: B) ($3,000,000 - $100,000 - $300,000 - $500,000 = $2,100,000 taxable estate + $400,000 gifts = $2,500,000 tax base)Page Ref.: I:1-10; Example I:1-8Objective: 321) Which of the following statements is incorrect?A) Property taxes are levied on real estate.B) Excise taxes are assessed on items such as gasoline and telephone use.C) Gift taxes are levied on the recipient of a gift.D) The estate tax is based on the fair market value of property at death or the alternate valuation date. Answer: CExplanation: C) Gift taxes are levied on the donor of a gift, not the recipient.Page Ref.: I:1-8 through I:1-10Objective: 322) Denzel earns $120,000 in 2012 through his job as a sales manager. What is his FICA tax?A) $6,364B) $8,566C) $6,780D) $9,180Answer: AExplanation: A) (110,100 × .042) + (120,000 × .0145) = $6,364Page Ref.: I:1-11Objective: 323) Martha is self-employed in 2012. Her business profits are $140,000. What is her self-employment tax?A) $17,700B) $15,510C) $21,420D) None of the above.Answer: BExplanation: B) (110,100 × .104) + (140,000 × .029) = $15,510Page Ref.: I:1-11Objective: 324) Which of the following is not one of Adam Smith's canons of taxation?A) equityB) convenienceC) certaintyD) paid by all citizensAnswer: DExplanation: D) Smith's canons of taxation are equity, certainty, convenience and economy.Page Ref.: I:1-11Objective: 425) Horizontal equity means thatA) taxpayers with the same amount of income pay the same amount of tax.B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.C) all taxpayers should pay the same tax.D) none of the above.Answer: AExplanation: A) Horizontal equity means that taxpayers with the same amount of income pay the same amount of tax.Page Ref.: I:1-12Objective: 426) Vertical equity means thatA) taxpayers with the same amount of income pay the same amount of tax.B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.C) all taxpayers should pay the same tax.D) none of the above.Answer: BExplanation: B) Vertical equity means that taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.Page Ref.: I:1-12Objective: 427) Which of the following is not an objective of the federal income tax law?A) Stimulate private investment.B) Reduce employment.C) Encourage research and development activities.D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation.Answer: BExplanation: B) Reduction of unemployment is an objective.Page Ref.: I:1-14 and I:1-15Objective: 428) Which of the following is not a social objective of the tax law?A) prohibition of a deduction for illegal bribes, fines and penaltiesB) a deduction for charitable contributionsC) an exclusion for interest earned by large businessesD) creation of tax-favored pension plansAnswer: CExplanation: C) There is no exclusion for interest income earned by large businesses.Page Ref.: I:1-15Objective: 429) Which of the following is not a taxpaying entity?A) CorporationB) PartnershipC) IndividualD) All of the above are taxpayers.Answer: BExplanation: B) A partnership is a flow-through entity.Page Ref.: I:1-17 through 23Objective: 530) All of the following are classified as flow-through entities for tax purposes exceptA) partnerships.B) C corporations.C) S corporations.D) limited liability companies.Answer: BExplanation: B) A C corporation is a taxpaying entity.Page Ref.: I:1-17Objective: 531) Rocky and Charlie form RC Partnership as equal partners. Rocky contributes $100,000 into RC while Charlie contributes real estate with a fair market value of $100,000. During the current year, RC earned net income of $600,000. The partnership distributes $200,000 to each partner. The amount that Rocky should report on his individual tax return isA) $0.B) $100,000.C) $200,000.D) $300,000.Answer: DExplanation: D) Rocky must report 50% × $600,000 or $300,000, his share of partnership net income. The distribution of $200,000 is not taxable but rather nontaxable return of capital reducing Rocky's basis ($100,000 original investment + $300,000 share of income) by $200,000 to $200,000.Page Ref.: I:1-21; Example I:1-18Objective: 532) AB Partnership earns $500,000 in the current year. Partners A and B are equal partners who do not receive any distributions during the year. How much income does partner A report from the partnership?A) $0B) $250,000C) $500,000D) None of the above.Answer: BExplanation: B) $500,000 × .5 = $250,000Page Ref.: I:1-21; Example I:1-18Objective: 533) In an S corporation, shareholdersA) are taxed on their proportionate share of earnings.B) are taxed only on dividends.C) may allocate income among themselves in order to consider special contributions.D) are only taxed on salaries.Answer: AExplanation: A) Similar to partners in a partnership, S corporation shareholders are taxed on their proportionate share of the income earned by the corporation, regardless of distribution payments.Page Ref.: I:1-22Objective: 534) All of the following statements are true exceptA) the net income earned by a sole proprietorship is reported on the owner's individual income tax return.B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed.C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed.D) LLCs are generally taxed as partnerships.Answer: BExplanation: B) An S Corporation is a flow-through entity, not a taxable entity. The items of income/loss are allocated to each shareholder who pays tax on the items on his or her individual income tax return. Page Ref.: I:1-17 through 23Objective: 535) Which of the following is not an advantage of a limited liability company (LLC)?A) limited liability for all members of a LLCB) ability to choose between taxation as a partnership or corporationC) double taxationD) All of the above are advantages of an LLC.Answer: CExplanation: C) A business operated as an LLC is a flow-through entity so it is not subject to double taxation.Page Ref.: I:1-22 and I:1-23Objective: 536) What is an important aspect of a limited liability partnership?A) It is the same as a limited partnership where the general partner has unlimited liability.B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision, but does not have unlimited liability in other matters.C) All partners have limited liability regarding all partnership activities.D) All partners have unlimited liability.Answer: BExplanation: B) A partner in an LLP remains responsible for his or her own actions, or those under his supervision, but is not liable for the actions of other partners.Page Ref.: I:1-23Objective: 537) The term "tax law" includesA) Internal Revenue Code.B) Treasury Regulations.C) judicial decisions.D) all of the above.Answer: DExplanation: D) The Code is a legislative source; the Regulations are an administrative source, and judicial decisions are judicial sources of tax law.Page Ref.: I:1-24Objective: 638) Which of the following serves as the highest authority for tax research, planning, and compliance activities?A) Internal Revenue CodeB) Income Tax RegulationsC) Revenue RulingsD) Revenue ProceduresAnswer: AExplanation: A)The Internal Revenue Code is the law passed by Congress. The other documents provide guidance in applying the law.Page Ref.: I:1-24Objective: 639) All of the following are executive (administrative) sources of tax law exceptA) Internal Revenue Code.B) Income Tax Regulations.C) Revenue Rulings.D) Revenue Procedures.Answer: AExplanation: A) The Internal Revenue Code is a legislative source.Page Ref.: I:1-24 and Topic Review I:1-3Objective: 640) Which of the following steps, related to a tax bill, occurs first?A) signature or veto by the President of the United StatesB) consideration by the SenateC) consideration by the House Ways and Means CommitteeD) consideration by the Joint Conference CommitteeAnswer: CExplanation: C) Most tax legislation originates in the House of Representatives and is then referred to the House Ways and Means Committee.Page Ref.: I:1-24Objective: 741) A tax bill introduced in the House of Representatives is thenA) referred to the House Ways and Means Committee for hearings and approval.B) referred to the full House for hearings.C) forwarded to the Senate Finance Committee for consideration.D) voted upon by the full House.Answer: AExplanation: A) Most tax legislation originates in the House of Representatives and is then referred to the House Ways and Means Committee.Page Ref.: I:1-24Objective: 742) When new tax legislation is being considered by Congress,A) the tax bill will usually originate in the Senate.B) different versions of the House and Senate bills are reconciled by the Speaker of the House and the President of the Senate.C) different versions of the House and Senate bills are reconciled by a Joint Conference Committee.D) after the President of the U.S. approves a tax bill, the Joint Conference Committee must then vote on passage of the bill.Answer: CExplanation: C) The Joint Conference Committee reconciles the House and Senate bills.Page Ref.: I:1-25Objective: 743) The Senate equivalent of the House Ways and Means Committee is the SenateA) Joint Committee on Taxation.B) Ways and Means Committee.C) Finance Committee.D) Joint Conference Committee.Answer: CExplanation: C) The Senate Finance Committee considers tax legislation.Page Ref.: I:1-25Objective: 744) When returns are processed, they are scored to determine their potential for yielding additional tax revenues. This program is calledA) Taxpayer Compliance Measurement Program.B) Discriminant Function System.C) Standard Audit Program.D) Field Audit Program.Answer: BPage Ref.: I:1-27Objective: 845) Which of the following individuals is most likely to be audited?A) Lola has AGI of $35,000 from wages and uses the standard deduction.B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm). She also received $350,000 salary as a CEO of a corporation.C) Melvin is retired and receives Social Security benefits.D) Jerry is a school teacher with two children earning $45,000 a year. He also receives $200 in interest income on a bank account.Answer: BExplanation: B) Of those listed, the taxpayer with investments or trade or business expenses that produce significant losses, Marvella, is more likely to be audited.Page Ref.: I:1-27Objective: 846) Alan files his 2011 tax return on April 1, 2012. His return contains no misstatements or omissions of income. The statute of limitations for changes to the return expiresA) April 1, 2014.B) April 15, 2015.C) April 15, 2016.D) The statute of limitations never expires.Answer: BExplanation: B) The three-year statute applies.Page Ref.: I:1-28Objective: 847) Peyton has adjusted gross income of $20,000,000 on his 2011 tax return, filed April 15, 2012. He accidentally failed to include $200,000 that he received for a television advertisement. How long does the IRS have to audit Peyton's federal tax return?A) until April 15, 2014B) until April 15, 2015C) until April 15, 2018D) The IRS can audit Peyton's return at any future date.Answer: BExplanation: B) The omission does not meet the 25% of reported income level, so the three-year statute still applies. Since the omission was accidental, the rules for fraud do not apply.Page Ref.: I:1-28Objective: 848) Latashia reports $100,000 of taxable income on her 2011 tax return, filed April 15, 2012. She omits $30,000 of income, but the error was not fraudulent. When does the statute of limitations for examining her tax return expire?A) April 15, 2015B) April 15, 2016C) April 15, 2018D) It never expires.Answer: CExplanation: C) The six-year statute applies since over 25% of income was omitted.Page Ref.: I:1-28Objective: 849) The IRS must pay interest onA) all tax refunds.B) tax refunds paid later than 30 days after the due date.C) tax refunds paid later than 45 days after the due date.D) The IRS never pays interest on tax refunds.Answer: CPage Ref.: I:1-28; Example I:1-27Objective: 850) Kate files her tax return 36 days after the due date. When she files the return, she sends a check for $2,000 which is the balance of the tax owed by her. Kate's penalty for failure to file a return will beA) 0.5% per month (or factor thereof) up to a maximum of 25%.B) 5% per month (or factor thereof) up to a maximum of 25%.C) 20% per month (or factor thereof).D) none of the above.Answer: BExplanation: B) The penalty for failure to file is 5% per month up to 25%.Page Ref.: I:1-28Objective: 851) What are the correct monthly rates for calculating failure to file and failure to pay penalties?Answer: CExplanation: C) The penalty for failure to file is 5% per month up to 25%. The failure to pay penalty is.0.5% per month up to 25%.Page Ref.: I:1-28 and I:1-29Objective: 852) Which is not a component of tax practice?A) providing clients tax refund advance loansB) tax researchC) tax planning and consultingD) complianceAnswer: APage Ref.: I:1-29Objective: 9。
Prentice Hall's Federal Taxation 2013 Individuals, 26e (Pope)IndividualsChapter I1 An Introduction to Taxation1) The federal income tax is the dominant form of taxation by the federal government.Answer: TRUEPage Ref.: I:1-2Objective: 12) The Sixteenth Amendment permits the passage of a federal income tax.Answer: TRUEPage Ref.: I:1-2Objective: 13) When a change in the tax law is deemed necessary by Congress, the entire Internal Revenue Code must be revised.Answer: FALSEExplanation: The federal income tax law is changed on an incremental basis.Page Ref.: I:1-3Objective: 14) A progressive tax rate structure is one where the rate of tax increases as the tax base increases. Answer: TRUEPage Ref.: I:1-4Objective: 25) The terms "progressive tax" and "flat tax" are synonymous.Answer: FALSEExplanation: A proportional tax and flat tax are synonymous.Page Ref.: I:1-4Objective: 26) A proportional tax rate is one where the rate of the tax is the same for all taxpayers, regardless of income levels.Answer: TRUEPage Ref.: I:1-4Objective: 27) Regressive tax rates decrease as the tax base increases.Answer: TRUEPage Ref.: I:1-5Objective: 28) The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.Answer: TRUEPage Ref.: I:1-5Objective: 29) A taxpayer's average tax rate is the tax rate applied to an incremental amount of taxable income that is added to the tax base.Answer: FALSEExplanation: The marginal tax rate is the tax rate applied to an incremental amount of taxable income. Page Ref.: I:1-5Objective: 210) If a taxpayer's total tax liability is $30,000, taxable income is $100,000, and economic income is $120,000, the average tax rate is 30 percent.Answer: TRUEPage Ref.: I:1-5Objective: 211) If a taxpayer's total tax liability is $4,000, taxable income is $20,000, and total economic income is $40,000, then the effective tax rate is 20 percent.Answer: FALSEExplanation: The effective rate would be $4,000/$40,000 = 10 percent.Page Ref.: I:1-6Objective: 212) All states impose a state income tax which is generally based on an individual's federal adjusted gross income (AGI) with minor adjustments.Answer: FALSEExplanation: While many states impose a state income tax, not all states do. In those states that do impose tax, the taxes vary greatly in both form and rates.Page Ref.: I:1-7Objective: 313) The unified transfer tax system, comprised of the gift and estate taxes, is based upon the total property transfers an individual makes during lifetime and at death.Answer: TRUEPage Ref.: I:1-7Objective: 314) Gifts between spouses are generally exempt from transfer taxes.Answer: TRUEPage Ref.: I:1-8Objective: 315) The primary liability for payment of the gift tax is imposed upon the donee.Answer: FALSEExplanation: The gift tax is imposed on the donor.Page Ref.: I:1-8Objective: 316) For gift tax purposes, a $13,000 annual exclusion per donee is permitted.Answer: TRUEPage Ref.: I:1-8Objective: 317) Property is generally valued on an estate tax return at the fair market value at the date of death or alternate valuation date.Answer: TRUEPage Ref.: I:1-10Objective: 318) Property transferred to the decedent's spouse is exempt from the estate tax because of the estate tax marital deduction provision.Answer: TRUEPage Ref.: I:1-10Objective: 319) Gifts made during a taxpayer's lifetime may affect the amount of estate tax paid by the taxpayer's estate.Answer: TRUEPage Ref.: I:1-10Objective: 320) While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature, property taxes are proportional.Answer: TRUEPage Ref.: I:1-11Objective: 321) Adam Smith's canons of taxation are equity, certainty, convenience and economy.Answer: TRUEPage Ref.: I:1-11Objective: 422) The primary objective of the federal income tax law is to achieve various economic and social policy objectives.Answer: FALSEExplanation: The primary objective of the federal income tax law is to raise revenues for government operations.Page Ref.: I:1-14Objective: 423) Individuals are the principal taxpaying entities in the federal income tax system.Answer: TRUEPage Ref.: I:1-17Objective: 524) The various entities in the federal income tax system may be classified into two general categories, taxpaying entities (such as individuals and C [regular] corporations) and flow-through entities such as sole proprietorships, partnerships, S corporations, and limited liability companies.Answer: TRUEPage Ref.: I:1-17Objective: 525) In 2012, dividends paid from most U.S. corporations are taxed at the same rate as the recipients' salaries and wages.Answer: FALSEExplanation: Qualifying dividends are taxed at a preferential rate.Page Ref.: I:1-20Objective: 526) Flow-through entities do not have to file tax returns since they are not taxable entities.Answer: FALSEExplanation: S Corporations, partnerships and limited liability companies do have to file an informational tax return each year.Page Ref.: I:1-20Objective: 527) S Corporations result in a single level of taxation.Answer: TRUEPage Ref.: I:1-22Objective: 528) In a limited liability partnership, a partner is not liable for his partner's acts of negligence or misconduct.Answer: TRUEPage Ref.: I:1-23Objective: 529) Limited liability companies may elect to be taxed as corporations.Answer: TRUEPage Ref.: I:1-23Objective: 530) Limited liability company members (owners) are responsible for the liabilities of their limited liability company.Answer: FALSEExplanation: Limited liability company members have protection from entity-level liability in a manner similar to that of shareholders of corporations.Page Ref.: I:1-23Objective: 531) The tax law encompasses administrative and judicial interpretations, such as Treasury regulations, revenue rulings, revenue procedures, and court decisions, as well as statutes.Answer: TRUEPage Ref.: I:1-24Objective: 632) Generally, tax legislation is introduced first in the Senate and referred to the Senate Finance Committee.Answer: FALSEExplanation: A tax bill is introduced in the House and referred to the Ways and Means Committee. Page Ref.: I:1-24Objective: 733) The Internal Revenue Service is the branch of the Treasury Department responsible for administering the federal tax law.Answer: TRUEPage Ref.: I:1-26Objective: 834) Generally, the statute of limitations is three years from the later of the date the tax return is filed or the due date.Answer: TRUEPage Ref.: I:1-28Objective: 835) Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is aA) progressive tax.B) proportional tax.C) regressive tax.D) None of the above.Answer: BExplanation: B) The tax rate is proportional because the 10% tax rate applies to both taxpayers regardless of their income level.Page Ref.: I:1-4; Example I:1-3Objective: 236) Which of the following taxes is progressive?A) sales taxB) excise taxC) property taxD) income taxAnswer: DExplanation: D) The income tax rates increase as a taxpayer's taxable income rises.Page Ref.: I:1-4Objective: 237) Which of the following taxes is proportional?A) gift taxB) income taxC) sales taxD) Federal Insurance Contributions Act (FICA)Answer: CExplanation: C) A sales tax is assessed at a fixed rate of the purchase amount, based on state and local law.Page Ref.: I:1-4 and I:1-11; Topic Review I:1-1Objective: 238) Which of the following taxes is regressive?A) Federal Insurance Contributions Act (FICA)B) excise taxC) property taxD) gift taxAnswer: AExplanation: A) For upper income wage earners, the Social Security tax ceases at a maximum wage base. For 2012, wages over $110,100 are not subject to the Social Security tax.Page Ref.: I:1-4 and I:1-11; Topic Review I:1-1Objective: 239) Sarah contributes $25,000 to a church. Sarah's marginal tax rate is 35% while her average tax rate is 25%. After considering her tax savings, Sarah's contribution costsA) $6,250.B) $8,750.C) $16,250.D) $18,750.Answer: CExplanation: C) [$25,000 × (100% - 35%)] = $16,250Page Ref.: I:1-5; Example I:1-4Objective: 240) Helen, who is single, is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest. If her marginal tax rate is 25% and her effective tax rate is 20%, what is the amount of Helen's tax savings from purchasing the residence?A) $5,600B) $7,000C) $21,000D) $22,400Answer: BExplanation: B) $28,000 × .25 marginal rate = $7,000 tax savings.Page Ref.: I:1-5; Example I:1-4Objective: 241) Charlotte pays $16,000 in tax deductible property taxes. Charlotte's marginal tax rate is 28%, effective tax rate is 22% and average rate is 25%. Charlotte's tax savings from paying the property tax isA) $3,520.B) $4,000.C) $4,480.D) $11,520.Answer: CExplanation: C) $16,000 × 0.28 = $4,480Page Ref.: I:1-5; Example I:1-4Objective: 242) Anne, who is single, has taxable income for the current year of $38,000 while total economic income is $43,000 resulting in a total tax of $5,625. Anne's average tax rate and effective tax rate are, respectively,A) 14.80% and 13.08%.B) 13.08% and 14.80%.C) 11.58% and 13.08%.D) 14.80% and 13.65%.Answer: AExplanation: A) $5,625 ÷ $38,000 = 0.1480$5,625 ÷ $43,000 = 0.1308Page Ref.: I:1-6; Example I:1-5Objective: 243) The unified transfer tax systemA) imposes a single tax upon transfers of property during an individual's lifetime only.B) imposes a single tax upon transfers of property during an individual's life and at death.C) imposes a single tax upon transfers of property only at an individual's death.D) none of above.Answer: BExplanation: B) The gift (transfers during life) tax and estate (transfers after death) tax systems are unified.Page Ref.: I:1-7Objective: 344) When property is transferred, the gift tax is based onA) replacement cost of the transferred property.B) fair market value on the date of transfer.C) the transferor's original cost of the transferred property.D) the transferor's depreciated cost of the transferred property.Answer: BExplanation: B) The gift tax is based on the property's fair market value on the date of transfer.Page Ref.: I:1-8Objective: 345) Paul makes the following property transfers in the current year:• $22,000 cash to his wife• $34,000 cash to a qualified charity• $220,000 house to his son• $3,000 computer to an unrelated friendThe total of Paul's taxable gifts, assuming he does not elect gift splitting with his spouse, subject to the unified transfer tax isA) $207,000.B) $223,000.C) $245,000.D) $279,000.Answer: AExplanation: A) $220,000 - $13,000 = $207,000. The gift to the unrelated friend is below the $13,000 annual gift tax exclusion. The gifts to his wife and to the charity are not subject to gift tax.Page Ref.: I:1-8; Example I:1-6Objective: 346) Charlie makes the following gifts in the current year: $40,000 to his spouse, $30,000 to his church, $18,000 to his nephew, and $25,000 to a friend. Assuming Charlie does not elect gift splitting with his wife, his taxable gifts in the current year will beA) $13,000.B) $17,000.C) $25,000.D) $40,000.Answer: BExplanation: B) ($18,000 - $13,000) + (25,000 - $13,000) = $17,000. The gift to his spouse and the charitable gift are not subject to gift taxes.Page Ref.: I:1-8; Example I:1-6Objective: 347) Shaquille buys new cars for five of his friends. Each car cost $70,000. What is the amount of Shaquille's taxable gifts?A) $0B) $285,000C) $337,000D) $350,000Answer: BExplanation: B) (5 × $70,000) - (5 × $13,000) = 285,000Page Ref.: I:1-8; Example I:1-6Objective: 348) In 2012, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceedsA) $1,500,000.B) $2,000,000.C) $3,500,000.D) $5,000,000.Answer: DExplanation: D) The unified credit equivalent for estate and gift taxes is $ 5,000,000 for 2011.Page Ref.: I:1-9; Example I:1-7Objective: 349) Eric dies in the current year and has a gross estate valued at $6,500,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000. Eric bequeaths $600,000 to his wife. Eric made no taxable transfers during his life. Eric's taxable estate will beA) $550,000.B) $5,550,000.C) $6,150,000D) $6,500,000.Answer: BExplanation: B) ($6,500,000 - $100,000 - $250,000 - $600,000) = $5,550,000Page Ref.: I:1-10; Example I:1-8Objective: 350) Thomas dies in the current year and has a gross estate valued at $3,000,000. During his lifetime (but after 1976) Thomas had made taxable gifts of $400,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Thomas' debts which amount to $300,000. Thomas bequeaths $500,000 to his wife. What is the amount of Thomas' tax base, the amount on which the estate tax is computed?A) $2,100,000B) $2,500,000C) $2,600,000D) $3,400,000Answer: BExplanation: B) ($3,000,000 - $100,000 - $300,000 - $500,000 = $2,100,000 taxable estate + $400,000 gifts = $2,500,000 tax base)Page Ref.: I:1-10; Example I:1-8Objective: 351) Which of the following statements is incorrect?A) Property taxes are levied on real estate.B) Excise taxes are assessed on items such as gasoline and telephone use.C) Gift taxes are levied on the recipient of a gift.D) The estate tax is based on the fair market value of property at death or the alternate valuation date. Answer: CExplanation: C) Gift taxes are levied on the donor of a gift, not the recipient.Page Ref.: I:1-8 through I:1-10Objective: 352) Denzel earns $120,000 in 2012 through his job as a sales manager. What is his FICA tax?A) $6,364B) $8,566C) $6,780D) $9,180Answer: AExplanation: A) (110,100 × .042) + (120,000 × .0145) = $6,364Page Ref.: I:1-11Objective: 353) Martha is self-employed in 2012. Her business profits are $140,000. What is her self-employment tax?A) $17,700B) $15,510C) $21,420D) None of the above.Answer: BExplanation: B) (110,100 × .104) + (140,000 × .029) = $15,510Page Ref.: I:1-11Objective: 354) Which of the following is not one of Adam Smith's canons of taxation?A) equityB) convenienceC) certaintyD) paid by all citizensAnswer: DExplanation: D) Smith's canons of taxation are equity, certainty, convenience and economy.Page Ref.: I:1-11Objective: 455) Horizontal equity means thatA) taxpayers with the same amount of income pay the same amount of tax.B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.C) all taxpayers should pay the same tax.D) none of the above.Answer: AExplanation: A) Horizontal equity means that taxpayers with the same amount of income pay the same amount of tax.Page Ref.: I:1-12Objective: 456) Vertical equity means thatA) taxpayers with the same amount of income pay the same amount of tax.B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.C) all taxpayers should pay the same tax.D) none of the above.Answer: BExplanation: B) Vertical equity means that taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.Page Ref.: I:1-12Objective: 457) Which of the following is not an objective of the federal income tax law?A) Stimulate private investment.B) Reduce employment.C) Encourage research and development activities.D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation.Answer: BExplanation: B) Reduction of unemployment is an objective.Page Ref.: I:1-14 and I:1-15Objective: 458) Which of the following is not a social objective of the tax law?A) prohibition of a deduction for illegal bribes, fines and penaltiesB) a deduction for charitable contributionsC) an exclusion for interest earned by large businessesD) creation of tax-favored pension plansAnswer: CExplanation: C) There is no exclusion for interest income earned by large businesses.Page Ref.: I:1-15Objective: 459) Which of the following is not a taxpaying entity?A) CorporationB) PartnershipC) IndividualD) All of the above are taxpayers.Answer: BExplanation: B) A partnership is a flow-through entity.Page Ref.: I:1-17 through 23Objective: 560) All of the following are classified as flow-through entities for tax purposes exceptA) partnerships.B) C corporations.C) S corporations.D) limited liability companies.Answer: BExplanation: B) A C corporation is a taxpaying entity.Page Ref.: I:1-17Objective: 561) Rocky and Charlie form RC Partnership as equal partners. Rocky contributes $100,000 into RC while Charlie contributes real estate with a fair market value of $100,000. During the current year, RC earned net income of $600,000. The partnership distributes $200,000 to each partner. The amount that Rocky should report on his individual tax return isA) $0.B) $100,000.C) $200,000.D) $300,000.Answer: DExplanation: D) Rocky must report 50% × $600,000 or $300,000, his share of partnership net income. The distribution of $200,000 is not taxable but rather nontaxable return of capital reducing Rocky's basis ($100,000 original investment + $300,000 share of income) by $200,000 to $200,000.Page Ref.: I:1-21; Example I:1-18Objective: 562) AB Partnership earns $500,000 in the current year. Partners A and B are equal partners who do not receive any distributions during the year. How much income does partner A report from the partnership?A) $0B) $250,000C) $500,000D) None of the above.Answer: BExplanation: B) $500,000 × .5 = $250,000Page Ref.: I:1-21; Example I:1-18Objective: 563) In an S corporation, shareholdersA) are taxed on their proportionate share of earnings.B) are taxed only on dividends.C) may allocate income among themselves in order to consider special contributions.D) are only taxed on salaries.Answer: AExplanation: A) Similar to partners in a partnership, S corporation shareholders are taxed on their proportionate share of the income earned by the corporation, regardless of distribution payments.Page Ref.: I:1-22Objective: 564) All of the following statements are true exceptA) the net income earned by a sole proprietorship is reported on the owner's individual income tax return.B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed.C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed.D) LLCs are generally taxed as partnerships.Answer: BExplanation: B) An S Corporation is a flow-through entity, not a taxable entity. The items of income/loss are allocated to each shareholder who pays tax on the items on his or her individual income tax return. Page Ref.: I:1-17 through 23Objective: 565) Which of the following is not an advantage of a limited liability company (LLC)?A) limited liability for all members of a LLCB) ability to choose between taxation as a partnership or corporationC) double taxationD) All of the above are advantages of an LLC.Answer: CExplanation: C) A business operated as an LLC is a flow-through entity so it is not subject to double taxation.Page Ref.: I:1-22 and I:1-23Objective: 566) What is an important aspect of a limited liability partnership?A) It is the same as a limited partnership where the general partner has unlimited liability.B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision, but does not have unlimited liability in other matters.C) All partners have limited liability regarding all partnership activities.D) All partners have unlimited liability.Answer: BExplanation: B) A partner in an LLP remains responsible for his or her own actions, or those under his supervision, but is not liable for the actions of other partners.Page Ref.: I:1-23Objective: 567) The term "tax law" includesA) Internal Revenue Code.B) Treasury Regulations.C) judicial decisions.D) all of the above.Answer: DExplanation: D) The Code is a legislative source; the Regulations are an administrative source, and judicial decisions are judicial sources of tax law.Page Ref.: I:1-24Objective: 668) Which of the following serves as the highest authority for tax research, planning, and compliance activities?A) Internal Revenue CodeB) Income Tax RegulationsC) Revenue RulingsD) Revenue ProceduresAnswer: AExplanation: A)The Internal Revenue Code is the law passed by Congress. The other documents provide guidance in applying the law.Page Ref.: I:1-24Objective: 669) All of the following are executive (administrative) sources of tax law exceptA) Internal Revenue Code.B) Income Tax Regulations.C) Revenue Rulings.D) Revenue Procedures.Answer: AExplanation: A) The Internal Revenue Code is a legislative source.Page Ref.: I:1-24 and Topic Review I:1-3Objective: 670) Which of the following steps, related to a tax bill, occurs first?A) signature or veto by the President of the United StatesB) consideration by the SenateC) consideration by the House Ways and Means CommitteeD) consideration by the Joint Conference CommitteeAnswer: CExplanation: C) Most tax legislation originates in the House of Representatives and is then referred to the House Ways and Means Committee.Page Ref.: I:1-24Objective: 771) A tax bill introduced in the House of Representatives is thenA) referred to the House Ways and Means Committee for hearings and approval.B) referred to the full House for hearings.C) forwarded to the Senate Finance Committee for consideration.D) voted upon by the full House.Answer: AExplanation: A) Most tax legislation originates in the House of Representatives and is then referred to the House Ways and Means Committee.Page Ref.: I:1-24Objective: 772) When new tax legislation is being considered by Congress,A) the tax bill will usually originate in the Senate.B) different versions of the House and Senate bills are reconciled by the Speaker of the House and the President of the Senate.C) different versions of the House and Senate bills are reconciled by a Joint Conference Committee.D) after the President of the U.S. approves a tax bill, the Joint Conference Committee must then vote on passage of the bill.Answer: CExplanation: C) The Joint Conference Committee reconciles the House and Senate bills.Page Ref.: I:1-25Objective: 773) The Senate equivalent of the House Ways and Means Committee is the SenateA) Joint Committee on Taxation.B) Ways and Means Committee.C) Finance Committee.D) Joint Conference Committee.Answer: CExplanation: C) The Senate Finance Committee considers tax legislation.Page Ref.: I:1-25Objective: 774) When returns are processed, they are scored to determine their potential for yielding additional tax revenues. This program is calledA) Taxpayer Compliance Measurement Program.B) Discriminant Function System.C) Standard Audit Program.D) Field Audit Program.Answer: BPage Ref.: I:1-27Objective: 875) Which of the following individuals is most likely to be audited?A) Lola has AGI of $35,000 from wages and uses the standard deduction.B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm). She also received $350,000 salary as a CEO of a corporation.C) Melvin is retired and receives Social Security benefits.D) Jerry is a school teacher with two children earning $45,000 a year. He also receives $200 in interest income on a bank account.Answer: BExplanation: B) Of those listed, the taxpayer with investments or trade or business expenses that produce significant losses, Marvella, is more likely to be audited.Page Ref.: I:1-27Objective: 876) Alan files his 2011 tax return on April 1, 2012. His return contains no misstatements or omissions of income. The statute of limitations for changes to the return expiresA) April 1, 2014.B) April 15, 2015.C) April 15, 2016.D) The statute of limitations never expires.Answer: BExplanation: B) The three-year statute applies.Page Ref.: I:1-28Objective: 877) Peyton has adjusted gross income of $20,000,000 on his 2011 tax return, filed April 15, 2012. He accidentally failed to include $200,000 that he received for a television advertisement. How long does the IRS have to audit Peyton's federal tax return?A) until April 15, 2014B) until April 15, 2015C) until April 15, 2018D) The IRS can audit Peyton's return at any future date.Answer: BExplanation: B) The omission does not meet the 25% of reported income level, so the three-year statute still applies. Since the omission was accidental, the rules for fraud do not apply.Page Ref.: I:1-28Objective: 878) Latashia reports $100,000 of taxable income on her 2011 tax return, filed April 15, 2012. She omits $30,000 of income, but the error was not fraudulent. When does the statute of limitations for examining her tax return expire?A) April 15, 2015B) April 15, 2016C) April 15, 2018D) It never expires.Answer: CExplanation: C) The six-year statute applies since over 25% of income was omitted.Page Ref.: I:1-28Objective: 879) The IRS must pay interest onA) all tax refunds.B) tax refunds paid later than 30 days after the due date.C) tax refunds paid later than 45 days after the due date.D) The IRS never pays interest on tax refunds.Answer: CPage Ref.: I:1-28; Example I:1-27Objective: 880) Kate files her tax return 36 days after the due date. When she files the return, she sends a check for $2,000 which is the balance of the tax owed by her. Kate's penalty for failure to file a return will beA) 0.5% per month (or factor thereof) up to a maximum of 25%.B) 5% per month (or factor thereof) up to a maximum of 25%.C) 20% per month (or factor thereof).D) none of the above.Answer: BExplanation: B) The penalty for failure to file is 5% per month up to 25%.Page Ref.: I:1-28Objective: 8。
