Tax 8-1 Identify the purpose of a given provision of the federal tax law. Flashcards
Federal Tax Law
Why is it important for a financial planner to understand the objectives of federal taxation?
8-1
It aids the planner in anticipating changes in a given area and allows him or her to plan accordingly.
Federal Tax Law
What is a relief provision as it applies to the objectives of federal taxation?
8-1
A relief provision provides “relief” to certain groups of taxpayers, e.g., the elderly or the blind.
Federal Tax Law
What is an incentive provision as it applies to the objectives of federal taxation?
8-1
An incentive provision is designed to promote socially desirable goals, such as capital expenditures or charitable contributions.
Federal Tax Law
Discuss how the federal tax system is used to promote price stability.
8-1
Price stability is promoted through the tax law by raising or lowering taxes to decrease or increase spending in the private sector.
Federal Tax Law
Module Check
- Which one of the following is not a social objective of the federal taxation system?
a. support of charitable organizations
b. revenue raising
c. preservation of our nation’s historical buildings
d. relief for certain child care expenses
(LO 8-1)
b. revenue raising
Revenue raising is one of the three main purposes of the federal taxing system; it is not a social objective.
Federal Tax Law
Module Check
- Which amendment to the Constitution gives Congress the power to tax income?
a. the 14th Amendment
b. the 16th Amendment
c. the 18th Amendment
d. none, the Constitution allows for the taxation of income
(LO 8-1)
b. The 16th Amendment to the Constitution allows for the taxation of income.
The 16th Amendment was adopted in 1909 to allow for the taxation of income.
Federal Tax Law
Module Check
- Which one of the following is not a primary objective of the federal tax law system?
a. raising revenue
b. economic growth and development
c. social stability
d. political stability
(LO 8-1)
d. political stability
Political stability is not a primary objective of the federal taxing system.
Federal Tax Law
Module Check
- Which one of the following is an economic objective of the federal tax system?
a. providing low-income housing
b. raising revenue
c. stabilizing prices
d. encouraging charitable contributions
(LO 8-1)
c. stabilizing prices
An economic objective of the federal tax system is price stability.
Revenue raising is a primary objective of the federal tax system.
Providing low-income housing and encouraging charitable contributions are social objectives
