ACC 331 Quiz 1

Question 1

Explict tax

Answer 1

An involuntary payment required by the government that is unrelated to any specific benefit or service recieved from the government. Raise revenue

Question 2

Tax liability calculation

Answer 2

Tax base x tax rate

Question 3

Four kinds of tax bases

Answer 3

Transactions, property or wealth, privileges or rights, earned income

Question 4

Average tax rate calculation

Answer 4

Tax liability/taxable income

Question 5

Average tax rate

Answer 5

Used to express the average tax burden paid by a tax payer

Question 6

Statutory marginal tax rate

Answer 6

Rate of tax that will be paid (saves) on an additional dollar of taxable income (deduction)

Question 7

SMTR calculation

Answer 7

(New total tax-old)/(new TI-old)

Question 8

Economic income

Answer 8

Taxable income-no tax income-non deductible expenses

Question 9

Effective tax rate

Answer 9

Average rate of tax on all sources of income

Question 10

ETR calculatiob

Answer 10

Total income tax/economic income

Question 11

Effective marginal tax rate

Answer 11

Rate of tax that will be paid on the next dollar of economic income earned

Question 12

EMTR calc

Answer 12

Change in tax/change in Econ income

Question 13

Proportional tax

Answer 13

Marginal rate=average rate

Question 14

Progressive tax

Answer 14

Marginal rate>average tax rate

Question 15

Regressive tax

Answer 15

Marginal tax

Question 16

Excise tax

Answer 16

Used as a deterant. Based on quantity rather than value

Question 17

Sales and use tax

Answer 17

State and local. Based on selling price of good. Use prevent buying in a lower sales tax

Question 18

Value added tax

Answer 18

Levied at each stage of the supply chain on the value added to the product

Question 19

FICA taxes

Answer 19

All employers and employees pay taxes on wages earned by employees.

Question 20

Self employment taxes

Answer 20

Individuals pay both the employer and employee portion of FICA taxes. Gets to deduct employee portion

Question 21

Unemployment taxes FUCA

Answer 21

Employers pay 6% on the first 7000 on wages earned by each employee

Question 22

Estate tax

Answer 22

Tax on right to transfer or recieve property upon death. Imposed on transferor (federal)

Question 23

Inheritance tax

Answer 23

Imposed on the recipient (state)

Question 24

Federal estate tax

Answer 24

Max rate is 40%. The first 5.49 million is excluded. Can transfer to surviving spouse

Question 25

Gift tax

Answer 25

Annual exclusion is 14000 per donee (28000 married). Estate tax can be applied to gifts

Question 26

Property taxes

Answer 26

Also called ad valorem tax

Question 27

Realty

Answer 27

Land and anything permanently attached to the land such as buildings

Question 28

Personal property

Answer 28

Anything other than land and building

Question 29

Income taxes

Answer 29

Significant source for the federal government. Based on net taxable income

Question 30

Income taxes paid by

Answer 30

Individuals, c corporations, trust and estates

Question 31

Effective tax planning

Answer 31

Seeks to max after tax returns

Question 32

Tax planning strategies

Answer 32

Shift from one period to another, shift from high bracket to lower, conversion from tax disadvantage o advantage

Question 33

Shift period

Answer 33

Move income to low tax years, move deductions to high tax years

Question 34

Shifting brackets

Answer 34

Move income low and deductions high