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Federal Income Tax > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

Tax

A

Payment that is required by a government agency but unrelated to any benefit

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2
Q

flat tax

A

a single rate is applied

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3
Q

Graduated Tax

A

Each bracket is taxed a different rate

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4
Q

Marginal Tax Rate

A

Incremental tax paid on incremental amount of deductions

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5
Q

Average Tax Rate

A

Average level of taxation on each of dollar of taxable income

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6
Q

Effective Tax Rate

A

Average rate of taxation for each dollar of total income

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7
Q

Proportional Tax Rate

A

Imposes a constant tax rate throughout the tax base (flat tax)

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8
Q

Progressive Tax Rate

A

Imposes an increasing marginal tax rate as the tax base increases

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9
Q

Federal Taxes

A

Income, Employment/Unemployment, Excise, and Transfer Taxes

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10
Q

Explicit Tax

A

Directly Assessed

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11
Q

Various Criteria for Tax Systems

A 
Sufficiency
Equity
Certainty
Convenience
Economy
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12
Q

6 Month Extension

A

Granted automatically by the IRS, extension only for filing, not for payment.

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13
Q

Penalty for Late filing

A

5% tax due each month payment isn’t recieved

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14
Q

Statute of Limitations

A

3 years after either the due date or when it was filed

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15
Q

DIF

A

Assigns score to each tac return probability

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16
Q

Document Perfection Program

A

Checks all returns for mathematical errors

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17
Q

Information Matching Program

A

Compares info from the tax return with info submitted to the IRS

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18
Q

Types of Audits

A

Correspondence, Office, and field

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19
Q

30-day Letter

A

Must either request a conference with an appeals officer or agree to proposed adjustment

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20
Q

90-day Letter

A

Either pay proposed deficiency or file a petition in the US Tax court yo hear case

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21
Q

Tax Court

A

National court of tax experts

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22
Q

US District Court

A

Gerneralist, may have a jury

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23
Q

US Court of Federal Claims

A

All types of claims against the government

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24
Q

US Circuit of Appeal

A

Appealed from Tax court

25
Q

3 Legislative Authorities

A

US constitution
IRC
Tax Treaties

26
Q

Tax Legislative Process

A

US HoR-> US Senate ->UD President

Joint Committee Conference

27
Q

Lowest Authority

A

US District courts, US court of federal claims, and the US Tax Court

28
Q

3 Forms of Regulation

A

Final
Temporary
Proposed

29
Q

Tax Research Steps

A 
Understand the fact
Identify Issues
Locate Relevant Authorities
Analyze Authorities
Document and communicate results
30
Q

Adjusted Gross Income

A

Gross income - AGI above line deductions

31
Q

Taxable income

A

Adjusted Gros income - AGI below line deduction

32
Q

Ordinary Income

A

Taxed at Ordinary rates

33
Q

Capital Income

A

Gains/losses on disposition

34
Q

Qualified Dividend

A

Generally taxed at 15%

35
Q

Deduction

A

decrease Taxable income

36
Q

Tax Credits

A

Decreases Tax Payable

37
Q

Tax prepayments

A

Withholdings
Estimated Tax Payments
Overpaid taxes

38
Q

Dependency Req

A

US citizen or resident
not file jointly
must be considered qualified

39
Q

Qualified Child

A

Relationship
Age
Residence
Support

40
Q

Qualified Relative

A

Relationship
Support
Gross Income

41
Q

Multiple Support Agreement

A

Must provide 10% or more support and a signed agreement

42
Q

Timing Strategies

A

When the income is taxed or deducted affects PV

Tax rate changes the benfits

43
Q

Timing when Rates are Constant

A

Either Accelerate deductions or defer taxable income

44
Q

Timing Strategy with changes

A

TR^Calc Optimal tax stat for deduction and income

TRv Accelerate deductions into earlier years

45
Q

Limitations on Timing strategy

A

Constructive Doctorine- resticts deferral for cash method
Acc Ded = Cash
Defer Inc = retain asset

46
Q

Income shifting trategies

A

Shifting income from high tax rate payers to low tax rate payers

47
Q

Assignment of Income Doctorine

A

Income to be taxed to the tax payer that actually earns it.

48
Q

Conversion Strategies

A

Recasting income and expenses recieve the most favorable tax treat,emt

49
Q

Business Purpose Doctrine

A

Allows IRS to challenge and disallow business expenses for transactions with no underlying business motivation.

50
Q

Step-Transaction Doctrine

A

Allows the IRS to collapse a series of related transactions into one

51
Q

Substance over Form Doctrine

A

Allows IRS to Consider the transactions substance regardless of its form to reclassify the transaction according to substance

52
Q

Economic Substance Doctrine

A

Requires transactions to have 2 req:
Must meaningfully change taxpayers economic position
Must have substantial purpose for the transaction

53
Q

Realization Principal

A

Taxpayer engages in transaction w/ third party

Transaction results in measurable change in property

54
Q

From of Reciept

A

Facilitates the exchange of rights to goods/services

55
Q

Return of Capital Principal

A

Cost of an asset is it’s beginning tax basus

56
Q

Tax benefit Rule

A

Indiv can claim Deductation in Y1

57
Q

Annual Exclusion Ratio

A

Original investment/ Expected value of annuity

58
Q

Alimony before 2018

A

Taxable and deductible

Federal Income Tax (1 decks)

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