Test Bank for South-Western Federal Taxation 2026, Individual Income Taxes 48th Edition 48th Edition by Young, Persellin, Cuccia

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South-Western Federal Taxation 2025, Individual Income Taxes 48th Edition Test Bank

1. Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

a. True

b. False

ANSWER: True

2. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.

a. True

b. False

ANSWER: False

3. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

a. True

b. False

ANSWER: False

4. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 1% to a high of 6%.

a. True

b. False

ANSWER: True

5. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

a. True

b. False

ANSWER: True

6. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle) of certainty.

a. True

b. False

ANSWER: False

7. The Medicare component of the FICA tax (1.45% on wages) is progressive because the tax due increases as wages increase.

a. True

b. False

ANSWER: False

8. The Federal estate and gift taxes are examples of progressive rate taxes.

a. True

b. False

ANSWER: True

9. The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive nor regressive).

a. True

b. False

ANSWER: False

10. Currently, the Federal corporate income tax is less progressive than the individual income tax.

a. True

b. False

ANSWER: True

11. Mona inherits her mother’s personal residence, which she converts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levied on the properties.

a. True

b. False

ANSWER: True

12. A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

a. True

b. False

ANSWER: False

13. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

a. True

b. False

ANSWER: True

14. The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

a. True

b. False

ANSWER: True

15. An excise tax is often used to try to influence behavior.

a. True

b. False

ANSWER: True

16. There is a Federal excise tax on hotel occupancy.

a. True

b. False

ANSWER: False

17. The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.

a. True

b. False

ANSWER: False

18. The amount of the state excise taxes on gasoline varies from state to state.

a. True

b. False

ANSWER: True

19. Not all of the states that impose a general sales tax also have a use tax.

a. True

b. False

ANSWER: False

20. Sales made over the internet are not exempt from the application of a general sales (or use) tax.

a. True

b. False

ANSWER: True

21. Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

a. True

b. False

ANSWER: True

22. States impose either a state income tax or a general sales tax, but not both types of taxes.

a. True

b. False

ANSWER: False

23. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

a. True

b. False

ANSWER: False

24. On transfers by death, the Federal government relies on an estate tax, while states may impose an estate tax, an inheritance tax, both taxes, or neither tax.

a. True

b. False

ANSWER: True

25. An inheritance tax is a tax on a decedent’s right to pass property at death.

a. True

b. False

ANSWER: False

26. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within a family unit.

a. True

b. False

ANSWER: True

27. Under Clint’s will, all of his property passes to either the Lutheran Church or to his spouse. No Federal estate tax will be due on Clint’s death.

a. True

b. False

ANSWER: True

28. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

a. True

b. False

ANSWER: True

29. The annual exclusion, currently $18,000, is available for gift and estate tax purposes.

a. True

b. False

ANSWER: False

30. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.

a. True

b. False

ANSWER: False

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