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True-False Questions
T 1. Before any federal income taxes may be withheld, there must be, or
4–2 must have been, an employer-employee relationship.
F 2. Since not-for-profit corporations are exempt from federal income taxes,
4–2 they are not defined as employers under the federal income tax
withholding law.
T 3. Under the federal income tax withholding law, a definition of employee
4–2 excludes partners.
F 4. The amount of federal income taxes to be withheld is determined after
4–2 subtracting from the employee’s gross wages any local and state taxes.
T 5. Under the federal income tax withholding law, income taxes are not
4–3 withheld from the value of meals that employers furnish workers on the
employers’ premises for the employers’ convenience.
F 6. Noncash fringe benefits that are provided employees are treated as
4–4 nontaxable income and thus are excluded from federal income tax
withholding.
F 7. All taxable noncash fringe benefits received during the year can only be
4–4 added to the employees’ taxable pay on the last payday of the year.
T 8. Cash tips of $20 or more received by a tipped employee in a calendar
4–5 month are treated as remuneration subject to federal income tax
withholding.
T 9. A waiter receives cash tips amounting to $120 in July. The waiter must
4–5 report the amount of the cash tips to the employer by August 12 (August
10 is a Sunday).
T 10. The withholding of federal income and FICA taxes from a tipped
4–5 employee is made from the employee’s wages that are under the
employer’s control.
F 11. An employer must withhold federal income taxes on both the tips
4–5 reported by tipped employees and the tips that the employer allocates to
the employees.
F 12. There is no limit to the amount of educational assistance that is exempt
4–6 from federal income tax withholdings.
T 13. The payments to a cook employed by a college fraternity are excluded
4–6 from federal income tax withholding.
F 14. There is no limit to the amount that an employer can contribute in an
4–9 employee’s SIMPLE retirement account.
E–27
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E–28 Chapter 4/Examination Questions
F 15. In the case of a 401(k) plan, employees age 50 or over can shelter an
4–9 extra $10,000 of their wages from federal income tax.
T 16. Persons eligible for deductible IRA contributions may put aside a
4–9 specified amount of their compensation without paying federal income
taxes on that amount.
T 17. The IRA format of the SIMPLE plan allows employees to make tax-free
4–9 contributions of up to $12,000.
T 18. In the IRA form of the Simple Retirement Account, employers must
4–9 match the employee’s contribution, dollar-for-dollar, up to 3% of the
employee’s compensation.
F 19. Evers, who works for two employers, is entitled to three personal
4–10 allowances. Evers must claim the three allowances with each of the
two employers during the entire calendar year.
F 20. After completion of Form W-4, an employer must copy the employee’s
4–11 social security card and place it in the employee’s employment file.
T 21. If married employees do not claim their marital status on Form W-4,
4–11 the employer must withhold according to the withholding tables for
single employees.
F 22. The special withholding allowance may be claimed only by those
4–12 employees who do not itemize deductions on their income tax returns.
F 23. Gere became the father of triplets on June 20. He must file an
4–12 amended Form W-4 on or before June 30.
F 24. On August 6, Hunt filed an amended Form W-4 to show a decrease in
4–12 the number of allowances claimed. Hunt’s employer must put the new
withholding allowance certificate into effect before the next weekly
payday on August 8.
F 25. A person holding two jobs may have additional income tax withheld by
4–12 increasing the number of withholding allowances claimed.
T 26. An employee submits an invalid Form W-4 to the employer and does
4–13 not replace it with a valid form. The employer should withhold federal
income taxes at the rate for a single person claiming no exemptions.
F 27. An employer is required to submit a copy of the employee’s Form W-4 to
4–13 the IRS if the employee has claimed 15 or more withholding allowances.
T 28. By completing Form W-4P, a person can elect to have no income tax
4–14 withheld from the annuity amounts the person receives.
F 29. Of the two main methods of withholding, only the wage-bracket
4–15 method distinguishes unmarried persons from married persons.
F 30. The standard deduction varies according to whether the wage-bracket
4–15 method or the percentage method is used.
F 31. When you pay supplemental wages at the same time as regular
4–18 wages, the method of calculating the withholding is the same for
vacation payments as for semiannual bonuses.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Examination Questions/Chapter 4 E–29
Multiple-Choice Questions
a 1. Under the federal income tax withholding law, which of the following is
4–2 not defined as an employee?
a. Partner who draws compensation for services rendered the
partnership
b. General manager, age 66
c. Payroll clerk hired one week ago
d. Governor of the state of Florida
e. Secretary employed by a not-for-profit corporation
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E–30 Chapter 4/Examination Questions
b 7. A personal allowance:
4–10 a. amounted to $2,000 in 2014.
b. may be claimed to exempt a portion of the employee's earnings
from withholding.
c. is indexed for inflation every calendar quarter.
d. may be claimed at the same time with each employer for whom an
employee is working during the year.
e. for one person is a different amount for a single versus a married
taxpayer.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Examination Questions/Chapter 4 E–31
d 8. Beech refuses to state her marital status on Form W-4 which she gave
4–11 to you, the payroll manager, when she was hired. You should:
a. tell Beech that it is OK since you know that she was recently
divorced and is reluctant to talk about it.
b. inform Beech that she will have to write the IRS and give her
reasons for refusing to state her marital status.
c. tell Beech that you will have to withhold income taxes as if she
were married and had claimed one allowance.
d. tell Beech that you will have to withhold income taxes according to
the withholding table for a single employee with no allowances.
e. advise Beech to write “It is no business of yours.” in the margin of
her Form W-4.
c 9. Arch gives you an amended Form W-4 dated March 13, 2014, on
4–12 which he claims two additional withholding allowances. He asks you to
refund the excess taxes that were deducted from January 1 to March
13 when Arch claimed only one withholding allowance. You should:
a. repay the overwithheld taxes on Arch’s next payday.
b. tell Arch that you will spread out a refund of the overwithheld taxes
equally over the next six pays.
c. inform Arch that you are unable to repay the overwithheld taxes
that were withheld before March 13 and that the adjustment will
have to be made when he files his annual income tax return.
d. tell Arch to write the IRS immediately and ask for a refund of the
overwithheld taxes.
e. inform Arch that you will appoint a committee to study his request.
a 10. To curb the practice of employees filing false Forms W-4, the IRS
4–13 requires that an employer submit to the agency a copy of each Form W-4:
a. the IRS has requested in writing.
b. on which an employee, usually earning $180 each week at the
time Form W-4 was filed, now claims to be exempt from
withholding.
c. on which an employee claims to be single but has 9 withholding
allowances.
d. on which a married employee claims no withholding allowances.
e. on which a recently divorced employee claims 5 withholding
allowances and authorizes an additional $10 to be withheld each
week.
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
E–32 Chapter 4/Examination Questions
d 12. An employer must file an information return under all of the following
4–28 conditions except:
a. to report $1,000 of compensation paid to an individual who is not
an employee.
b. to report the wages totaling $600 paid to an independent
contractor during the calendar year.
c. to report dividends totaling $600 paid to an individual during the
calendar year.
d. to report commissions of $500 paid to a self-employed salesman.
e. An information return must be filed under each of the above
conditions.
c 13. Which of the following forms is used to report rents paid over $600 to
4–28 landlords?
a. Form 1099–R
b. Form 1099–INT
c. Form 1099–MISC
d. Form 1099–G
e. Form 8027
d 14. A company must withhold federal income taxes from payments made
4–29 to independent contractors in which of the following cases?
a. When there is a signed contract between the parties
b. When the contractor is paid more than $10,000
c. When the contractor is a corporation
d. When the contractor has not provided a taxpayer identification
number and the contract is $600 or more
e. All of the above
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Mr. Gibson, of Ohio, Mr. Eagan, of Nebraska, and Mr. Oliver, of
Iowa, and others.
Senator Warner Miller, of New York, presented the name of Hon.
Levi P. Morton, of New York, which was seconded by Mr. Sage, of
California, Governor Foster, of Ohio, Mr. Oliver, of South Carolina,
General Hastings, of Pennsylvania, and others.
Mr. McElwee, of Tennessee, presented the name of William R.
Moore, of that State.
One ballot was taken, resulting as follows:
Morton 591
Phelps 119
Bradly 103
Bruce 11
Thomas 1
Harrison. Cleveland.
California 8 Alabama 10
Colorado 3 Arkansas 7
Illinois 22 Connecticut 6
Indiana 15 Delaware 3
Iowa 13 Florida 4
Kansas 9 Georgia 12
Maine 6 Kentucky 13
Massachusetts 14 Louisiana 8
Michigan 13 Maryland 8
Minnesota 7 Mississippi 9
Nebraska 5 Missouri 16
Nevada 3 New Jersey 9
New Hampshire 4 North Carolina 12
New York 36 South Carolina 9
Ohio 23 Tennessee 11
Oregon 3 Texas 13
Pennsylvania 30 Virginia 12
Rhode Island 4 West Virginia 6
Vermont 4
Wisconsin 11 168
233
168
Harrison’s majority 65
1884. 1888.
Rep. Dem. Rep. Dem.
Maine 72,209 52,140 72,659 49,730
N. Hampsh’e 43,249 39,183 45,728 43,444
Vermont 39,514 17,331 45,192 16,788
Massachus’ts 146,724 122,352 183,447 151,990
Rhode Island 19,030 12,391 21,960 17,533
Connecticut 65,923 67,199 74,584 74,920
New York 562,005 563,154 649,114 635,715
New Jersey 123,366 127,778 144,426 151,154
Penna. 473,804 392,785 526,223 446,934
Ohio 400,082 368,280 416,054 396,455
Indiana 238,463 244,990 263,361 261,013
Illinois 337,469 312,351 370,241 348,360
Michigan 192,669 149,835 236,307 213,404
Wisconsin 161,157 146,459 176,553 155,232
Iowa 197,089 177,316 211,592 177,899
Minnesota 111,685 70,065 136,359 99,664
Colorado 36,166 27,603 51,796 37,610
California 102,416 89,288 124,809 117,729
Kansas 154,406 90,132 182,610 102,580
Nebraska 76,912 54,391 108,425 80,552
Nevada 7,193 5,578 7,238 5,326
Oregon 26,860 24,604 33,293 26,524
Totals 3,608,965 3,153,912 4,081,971 3,610,556
1884. 1888.
Rep. Dem. Rep. Dem.
Delaware 12,951 16,964 12,950 16,414
Maryland 85,699 96,932 99,761 106,172
Virginia 139,356 145,497 150,442 151,977
W. Virginia 63,096 67,317 75,052 75,588
Kentucky 118,122 152,961 155,154 183,800
Tennessee 124,078 133,258 139,815 159,079
Arkansas 50,895 72,927 58,752 85,962
N. Carolina 125,068 142,950 134,784 147,902
Missouri 202,929 235,988 236,325 261,957
Totals 922,194 1,064,794 1,063,035 1,188,851
GULF STATES.
REPUBLICAN.
Territories.
Alaska 2 0 0
Arizona 1 1 0
Dist. of Columbia 0 2 0
Indian Territory 1 1 0
New Mexico 6 0 0
Oklahoma 2 0 0
Utah 2 0 0
Total 535⅙ 182⅙ 182
Absent and not voting, 1⅔.
Reed, of Maine, received 3 votes, and Lincoln, of Illinois, 1.
Major McKinley moved to make the nomination unanimous, and it
was adopted with great enthusiasm.
In response to the unanimous request of the New York delegation,
Hon. Whitelaw Reid was nominated for Vice-President by
acclamation.
[See Book II. for Platform and Comparison of Platforms; Book III.
for speech of Hon. Chauncey M. Depew.]
DEMOCRATIC.
Territories
Alaska 2 0 0 0 0
Arizona 5 0 0 1 0
Dist. of Columbia 2 0 0 0 0
New Mexico 4 1 1 0 0
Oklahoma 2 0 0 0 0
Utah 2 0 0 0 0
Indian Territory 2 0 0 0 0
Total 617⅓ 115 103 36½ 38⅔
Number of votes cast, 909½. Necessary to a choice, 607.
Of the scattering votes Campbell got two from Alabama.
Carlisle got 3 from Florida, 6 from Kentucky, 5 from Ohio. Total
14.
Stephenson got 16⅔ from North Carolina.
Pattison got 1 from West Virginia.
Russell got 1 from Massachusetts.
Whitney got 1 from Maine.
Adlai E. Stevenson, of Illinois, former Assistant Postmaster-
General, was nominated Vice-President on the first ballot, his chief
competitor being Senator Gray, of Indiana.
[See Book II. for Democratic National Platform and Comparison;
Book III. for Governor Abbett’s speech nominating Cleveland.]
A notable scene in the Convention was created by Mr. Neal, of
Ohio, who moved to substitute a radical free trade plank as a
substitute for the somewhat moderate utterances reported by ex-
Secretary of the Interior Vilas, who read the report of the Committee
on Platform. The substitute denounced the protective tariff as a
fraud.
Mr. Neal made an earnest speech in support of his substitute and
was ably seconded by Mr. Watterson.
Mr. Vilas replied defending the majority report in a vigorous
speech, which was as generously applauded as that which preceded.
The debate was animated and made specially interesting by the
suggestions and calls from the galleries. The substitute was finally
accepted by Chairman Jones on behalf of the committee, but this did
not satisfy the friends of the substitute, who persisted in having a roll
call upon its adoption.
A synopsis of the platform was submitted to and received the
approval of Mr. Cleveland, and it was reported that the Neal
substitute was prepared by the anti-Cleveland leaders, and the fact
that the roll call was persisted in by the anti-Cleveland men gave
color to this report.
There was a great deal of confusion and excitement preceding the
roll call, and its progress was watched with as much interest as
though its result was to decide the nomination. The States at the
head of the roll generally cast their votes according to what was
believed to be the feeling of their delegations on the Presidency, but
later on the order was more varied, States known to be for Cleveland
casting their solid vote for the substitute. New York was loudly
cheered when the 72 votes of the State were given for the substitute.
It was a most inconsistent vote, as Tammany is not regarded as a free
trade organization—rather as one favoring moderate tariffs. A ripple
of excitement was occasioned when Chairman Hensel cast the 64
votes of Pennsylvania against the substitute. Mr. Wallace protested
that 15 of the delegates favored the substitute, and he demanded that
the delegation be polled. A colloquy followed between Hensel and
Wallace on the rules of the Convention, and the point raised by the
former that Wallace’s motion was not in order under the unit rules
was sustained by the Chair.
The result of the vote was 564 for the substitute and 342 against it.