Notes/study material Acct 4611
Notes/study material Acct 4611 TAX 4611
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This 3 page Class Notes was uploaded by Lindsay Taylor on Tuesday September 13, 2016. The Class Notes belongs to TAX 4611 at East Carolina University taught by Dr. Hagan in Fall 2016. Since its upload, it has received 8 views. For similar materials see Tax For Decision Making in Accounting at East Carolina University.
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Date Created: 09/13/16
This is a study guide for test 1 in Acct 4611 Real Property taxes are levied annually and are based on the market value of the property as determined by the taxpayer. False Every state that imposes a sales tax imposes a complementary use tax on the ownership, possession, or consumption to tangible goods within the state. The use tax applies only if the owner of the goods did pay the state's sales tax when the goods were purchased. False If a tax is so designed so that those with the same ability to pay (as measured by the tax base) owner the same amount of tax, that system can be described as horizontally equitable. True For modern tax system, the tax law encompasses three basic sources of authority: Statutory Law, Administrative Pronouncements and Judicial Decisions. In combination, these sources provide the rules of the game by which the taxpayer and the governments must abide. True A tax can be defined simply as a payment to support the cost of government. It is to deter and punish unacceptable behavior. False The incidence of tax refers to the ultimate economic burden represented by the tax. True A taxpayer is a person or organization required by law to pay a tax to a government authority. The term person renders to both natural persons and corporations. True The dollar amount of tax is calculated by multiplying the base by the tax rate. True The right of the government to levy a tax on a specific person or organization is referred to as jurisdiction. Jurisdiction exists because of some rational linkage between the government and the taxpayer. True In financial terms, a business strategy minimizes the tax cost of a transaction will always maximize net present value and be the optimal strategy of the firm. False Vertical Equity is concerned with a fair rate structure which to calculate the tax on different amounts of base. False A firm’s marginal tax rate may change in future years because the government changes the statutory rates for all taxpayers or because of a change in the firm’s circumstances. True Managers can request the IRS to analyze a proposed transaction and conclude how the tax law should be applied. The IRS will communicate its conclusion in the form of regulations. True The federal income tax system is notorious for the frequency with which congress changes the rules of the game. But even within this volatile tax system, some provisions are quite stable. True In negotiating a private market transaction, each party can evaluate the tax consequences not only to itself but also to the other part. By doing so, the parties can work together to minimize the aggregate tax cost of the transaction and share the tax savings between them. True Every item of income is ultimately characterized for tax purposes as either ordinary income or capital growth. True In present value terms, tax costs decrease (and cash flows increase) when a tax liability is deferred until a later taxable year True Tax costs increase (and cash flows decrease) when income is generated in a jurisdiction with a high rate. False Tax costs increase (and cash flows decrease) when income is taxed at preferential rate because of its character. False A tax researcher should assume that the client's initial summary of the transaction's factually accurate and complete. False A taxpayer may request a technical advice memorandum (TAX) from the IRS regarding the appropriate tax treatment if a proposed transaction or a completed transaction for which a tax return has not yet been filed. True Secondary authorities attempt to explain and interpret the tax law. True Primary authority will always provide an unambiguous answer to the tax researcher's question False After the appellate court has either affirmed or reserved the trial court's decision, the losing party may choose to argue their case at the US Court of Federal Claims. False Questions: 1. What are the 6 steps of the tax research process? 2. What are the standards of a good tax system? 3. Know how to calculate total cost with the tax rate and the marginal tax rate.
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