Question 1

Company D, which has its home office in Raleigh, North Carolina, conducts business in the United States, Canada, and Mexico. Which of the following statements is true?

Accepted Answer

A)  Because Company D must pay income tax to North Carolina, it is not required to pay tax to any other state.
B)  Because Company D must pay income tax to North Carolina, it is not required to pay federal income tax.
C)  Because Company D must pay income tax to the United States, it is not required to pay tax to Canada or Mexico.
D)  None of the above is true.E) A) and D)
F) None of the above

Question 2

The majority of state governments raise revenue from both personal and corporate income taxes.

Accepted Answer

A) True 
 B)False

Question 3

Taxes on personal property are more difficult to administer and enforce than taxes on real property.

Accepted Answer

A) True 
 B)False

Question 4

The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr. Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the incidence of the property tax increase?

Accepted Answer

A)  Mr.Janey
B)  Ms.Lacey
C)  Both Mr.Janey and Ms.Lacey
D)  Neither Mr.Janey nor Ms.LaceyE) A) and D)
F) A) and B)

Question 5

Which of the following does not characterize federal transfer taxes?

Accepted Answer

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.E) None of the above
F) C) and D)

Question 6

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(n) :

Accepted Answer

A)  User's fee
B)  Transaction-based tax
C)  Activity-based tax
D)  Government penaltyE) A) and B)
F) A) and C)

Question 7

When did the federal income tax become a permanent tax?

Accepted Answer

A)  Immediately after the Revolutionary War.
B)  During the Civil War.
C)  In 1913 when the Sixteenth Amendment to the U.S.Constitution was ratified.
D)  In 1939 when Congress enacted the first Internal Revenue Code.E) All of the above
F) C) and D)

Question 8

Grant Wilson is an employee of Market Enterprises, a corporation operating in state A. Identify the different types of potential taxes to be paid by both Grant and Market Enterprises with respect to this employment relationship.
Grant is potentially liable for federal, state, and local income taxes. He will also be liable for federal employment taxes. Market Enterprises will pay federal employment taxes and federal and state unemployment taxes based on compensation paid to Grant.

Accepted Answer

Grant is potentially liable for federal,...

Question 9

Which of the following statements concerning sales taxes is false?

Accepted Answer

A)  Sales taxes apply to the purchase of most types of consumer goods.
B)  Sales taxes apply to the purchase of most types of consumer services.
C)  Sales taxes are collected by the seller when the sale is made.
D)  Sales taxes imposed on the purchaser of retail items are consumption taxes.E) B) and C)
F) A) and D)

Question 10

In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.

Accepted Answer

A) True 
 B)False

Question 11

A user fee entitles the payer to a specific good or service from the government.

Accepted Answer

A) True 
 B)False

Question 12

A sales tax can best be described as a(n) :

Accepted Answer

A)  Consumption tax
B)  Income tax
C)  Activity tax
D)  Ad valorem taxE) A) and B)
F) C) and D)

Question 13

Which of the following is an example of an activity-based tax?

Accepted Answer

A)  A tax on business' net income.
B)  An excise tax.
C)  A gift tax on the transfer of assets by gift.
D)  Both A.and C.E) A) and B)
F) A) and C)

Question 14

A state government may levy either a sales tax or a use tax on consumers but not both.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an advantage of state conformity to federal corporate income tax laws?

Accepted Answer

A)  States have control over their corporate income tax revenues.
B)  States do not have to enact comprehensive corporate income tax statutes.
C)  Conformity eases the compliance burden of corporate taxpayers.
D)  All of the above are advantages of state conformity.E) All of the above
F) A) and D)

Question 16

Which of the following statements regarding tax systems is false?

Accepted Answer

A)  A single percentage that applies to the entire tax base is described as a flat rate.
B)  When designing a tax, governments try to identify tax bases that taxpayers can easily avoid or conceal.
C)  A tax base is an item, occurrence, transaction, or activity with respect to which a tax is levied.
D)  With regard to tax systems, the term revenue refers to the total tax collected by the government.E) A) and B)
F) B) and D)

Question 17

Which of the following is an example of a transaction-based tax?

Accepted Answer

A)  A tax on net business income.
B)  An excise tax.
C)  An estate tax on the transfer of assets at death.
D)  Both B.and C.E) All of the above
F) A) and B)

Question 18

Which tax raises the most revenue for the federal government?

Accepted Answer

A)  Corporate income tax
B)  Individual income tax
C)  Excise taxes
D)  Transfer taxesE) A) and B)
F) None of the above

Question 19

A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following taxes is a significant source of revenue for local governments?

Accepted Answer

A)  Real property tax
B)  Employment tax
C)  Income tax
D)  None of the aboveE) All of the above
F) B) and C)

Exam 1: Taxes and Taxing Jurisdictions

Which of the following statements regarding tax systems is false?

Correct Answer
verified

The majority of state governments raise revenue from both personal and corporate income taxes.

Correct Answer
verified

Which of the following is an example of an activity-based tax?

Correct Answer
verified

Company D, which has its home office in Raleigh, North Carolina, conducts business in the United States, Canada, and Mexico. Which of the following statements is true?

Correct Answer
verified

A sales tax can best be described as a(n) :

Correct Answer
verified

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(n) :

Correct Answer
verified

Which of the following statements concerning sales taxes is false?

Correct Answer
verified

Which of the following does not characterize federal transfer taxes?

Correct Answer
verified

When did the federal income tax become a permanent tax?

Correct Answer
verified

In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.

Correct Answer
verified

Which of the following taxes is a significant source of revenue for local governments?

Correct Answer
verified

Which of the following is not an advantage of state conformity to federal corporate income tax laws?

Correct Answer
verified

Which of the following is an example of a transaction-based tax?

Correct Answer
verified

A user fee entitles the payer to a specific good or service from the government.

Correct Answer
verified

A state government may levy either a sales tax or a use tax on consumers but not both.

Correct Answer
verified

A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated.

Correct Answer
verified

Which tax raises the most revenue for the federal government?

Correct Answer
verified

Taxes on personal property are more difficult to administer and enforce than taxes on real property.

Correct Answer
verified

Correct Answer
verified
Grant is potentially liable for federal,...
View Answer

The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr. Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the incidence of the property tax increase?

Correct Answer
verified

Exam 1: Taxes and Taxing Jurisdictions

Which of the following statements regarding tax systems is false?

Correct AnswerverifiedShow Answer

The majority of state governments raise revenue from both personal and corporate income taxes.

Correct AnswerverifiedShow Answer

Which of the following is an example of an activity-based tax?

Correct AnswerverifiedShow Answer

Company D, which has its home office in Raleigh, North Carolina, conducts business in the United States, Canada, and Mexico. Which of the following statements is true?

Correct AnswerverifiedShow Answer

A sales tax can best be described as a(n) :

Correct AnswerverifiedShow Answer

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(n) :

Correct AnswerverifiedShow Answer

Which of the following statements concerning sales taxes is false?

Correct AnswerverifiedShow Answer

Which of the following does not characterize federal transfer taxes?

Correct AnswerverifiedShow Answer

When did the federal income tax become a permanent tax?

Correct AnswerverifiedShow Answer

In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.

Correct AnswerverifiedShow Answer

Which of the following taxes is a significant source of revenue for local governments?

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of state conformity to federal corporate income tax laws?

Correct AnswerverifiedShow Answer

Which of the following is an example of a transaction-based tax?

Correct AnswerverifiedShow Answer

A user fee entitles the payer to a specific good or service from the government.

Correct AnswerverifiedShow Answer

A state government may levy either a sales tax or a use tax on consumers but not both.

Correct AnswerverifiedShow Answer

A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated.

Correct AnswerverifiedShow Answer

Which tax raises the most revenue for the federal government?

Correct AnswerverifiedShow Answer

Taxes on personal property are more difficult to administer and enforce than taxes on real property.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedGrant is potentially liable for federal,...View AnswerShow Answer

The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr. Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the incidence of the property tax increase?

Correct AnswerverifiedShow Answer

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Grant is potentially liable for federal,...
View Answer

Correct Answer
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