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Ch 1 Hw

Ch 1 Quiz

Tax Drill - Legislative Process

Complete the following statements regarding the legislative process.

Federal tax legislation generally originates in the House of Representatives , where it is first
considered by the House Ways and Means Committee . Tax bills originate in the Senate , when
they are attached as riders to other legislative proposals.

Tax Drill - U.S. Tax Court

Indicate whether the following statements are "True" or "False" regarding judicial decisions of
the U.S. Tax Court.

a. Summary opinions are issued in small tax cases and may not be used as precedent in any other True
case.
b. Regular decisions deal with situations necessitating only the application of already established False
principles of law.
c. Memorandum decisions involve novel issues not previously resolved by the Tax Court. False
d. Regular decisions are published by the U.S. Government in a series called Tax Court of the True
United States Reports (T.C.).

Tax Drill - Tax Research

Indicate whether the following statements are "True" or "False" regarding tax research.

a. Assessing the validity of the tax law sources is not necessary when conducting tax research. False
b. When dealing with proposed transactions, the tax research process is concerned with the True
determination of possible alternative tax consequences.
c. Tax research is the method used to determine the best available solution to a situation that True
possesses tax consequences.
d. If the tax research problem is not complex, the researcher may bypass the tax service and turn True
directly to the Internal Revenue Code and the Treasury Regulations.
Tax Drill - Tax Sources

Indicate whether the following statements are "True" or "False" regarding the validity and weight
of tax sources.

a. If an answer is not in the Code, it may be necessary to resort to the Regulations and judicial True
decisions.
b. The language of the Code often is extremely difficult to comprehend. True
c. Treasury Regulations are often said to have the force and effect of law. True
d. Revenue Rulings issued by the IRS carry more weight than Treasury Department Regulations. False

Tax Drill - Regulations

Indicate whether the following statements are "True" or "False" regarding the validity of
Regulations.

a. In a challenge, the burden of proof is on the taxpayer to show that the Regulation is wrong. True
b. IRS agents do not have to give the Code and any related Regulations equal weight when dealing False
with taxpayers and their representatives.

c. Some Regulations merely reprint or rephrase what Congress has stated in its Committee Reports True
issued in connection with the enactment of tax legislation.
d. In some Code Sections, Congress has given to the "[Treasury] Secretary or his delegate" the True
authority to prescribe Regulations to carry out the details of administration or to otherwise
complete the operating rules.

Tax Drill - Judicial Decisions

Indicate whether the following items are factors to be considered regarding whether reliance can
be placed on a particular judicial decision. Select "Yes" or "No", whichever is appropriate.

a. The outcome or status of the decision on appeal. Yes


b. The level of the court. Yes
c. The legal residence of the taxpayer. Yes
d. Whether the decision represents the weight of authority on the issue. Yes

Tax Drill - Tax Planning Components


Indicate whether the following items are key components of tax planning. Select "Yes" or "No",
whichever is appropriate.

a. Avoid the recognition of income (usually by resorting to a nontaxable source or nontaxable Yes
event).
b. Convert the classification of income (or deductions) to a more advantageous form (e.g., ordinary Yes
income into capital gain).
c. Defer the recognition of deductions (or accelerate income). No
d. Choose the business entity with the desired tax attributes. Yes

Tax Drill - CPA Examination

Indicate whether the following statements are "True" or "False" regarding the CPA examination.

a. The exam has four sections. True


b. To prepare for the revised CPA exam, candidates will be able to use new True
AICPA developed blueprints that will replace the current Content
Specification Outline (CSO) and Skill Specification Outline (SSO).
c. Multiple-choice questions and task-based simulations each will False
contribute about 70 percent toward the candidate's score in the AUD,
FAR, and REG sections.

Tax Drill - Wherewithal to Pay Concept

Complete the following statements regarding the wherewithal to pay concept.

The wherewithal to pay concept recognizes the inequity of taxing a transaction when the
taxpayer lacks the means with which to pay the tax. It is particularly suited to situations in which
the taxpayer's economic position has not changed significantly as a result of the transaction.
Regulations are arranged in a different sequence than the Internal Revenue Code.
True
False
FALSE

Regulations are issued by the Treasury Department.


True
False
TRUE

The like-kind tax free exchange treatment is an example of the wherewithal to pay concept.
True
False

TRUE

Which provision could best be justified as a means of controlling the economy?


a. The rehabilitation tax credit.
b. Amortization of pollution control facilities.
c. The § 179 immediate expensing of depreciable capital expenditures.
d. Write-off of research and development expenditures.
e. None of these choices are correct.
C

Federal tax legislation generally originates in what committee?


a. House Budget Committee.
b. House Taxation Committee.
c. Senate Finance Committee.
d. House Ways and Means Committee.
e. None of these choices are correct.
D