Name: ________________________ Class: ___________________ Date: __________ ID: A
BUSA307 - Federal Taxation, Sample Exam 1 Chapters 1-5
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 changeshould affect the amount of
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 willbe 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 Federalincome 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 tofile 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 taxpayersto 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 theyear 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
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
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 adeduction.____ 14. Darren, age 20 and not disabled, earns $4,500 during 2006. Darren’s parents
claim him as adependent 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
file an income tax return as the child’s income will bereported on the parents’ return.____ 17. Regardless of the standard deduction and exemption amounts, a self-employed individual with net earningsof $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
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 36months, 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.