Federal Taxation Quiz 1

ACCT 320 – AE

Federal taxation 1

QUIZ 1

1. Which of the following characteristics would not be used to describe the generic nature of a "tax"?

a. Normally, there is a direct relationship between the exaction of revenue and the benefits received by the taxpayer.

b. A tax is levied on the basis of predetermined criteria.

c. A tax is levied on the basis of recurring periods.

d. A tax may be distinguished from a penalty because it is not specifically designed to control or stop a particular activity.

e. At least in the United States, taxes are often used to meet certain social as well as economic goals.

2. Which one of the following statements is not true concerning tax rates?

a. A proportional tax rate is one in which an increasing percentage rate is applied to increasing increments of the tax base.

b. The marginal tax rate of any rate structure is that percentage at which the next dollar added to the tax base will be taxed.

c. The average tax rate is the percentage of taxable income paid in tax.

d. The effective tax rate is the percentage of total income paid in tax.

e. An individual cannot pay more in Federal income taxes than he reports as taxable income unless his marginal tax rate exceeds 100 percent.

3. T has a tax base of $30,000 and pays a tax of $2,500 on the first $25,000 and $750 on the next $5,000.This is an example of what type of tax rate?

a. Proportional

b. Progressive

c. Regressive

d. Neutral

e. None of the above

4. T has a tax base of $30,000 and pays a tax of $2,500 on the first $25,000 and $750 on the next $5,000.T has a marginal tax rate of

a. 10 percent.

b. 15 percent.

c. 20 percent.

d. 10.83 percent.

e. None of the above.

5. T has a tax base of $30,000 and pays a tax of $2,500 on the first $25,000 and $750 on the next $5,000.T has an average tax rate of

a. 10 percent.

b. 15 percent.

c....