Test Bank South-Western Federal Taxation 2025: Corporations,
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Partnerships,Estates and Trusts by Nellen k k k k k k
Chapter 01: Understanding and Working with the Federal Tax Law
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True / False
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1. Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 01 - LO: 1-01
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:
k United States - TX - AICPA: FN-Measurement k k k k k k
United States - AK - AICPA: FN-Research k k k k k k
KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
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DATE MODIFIED:
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2. The U.S. Federal government has a provision in the Constitution that precludes deficit spending.
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a. True
b. False
ANSWER: False
RATIONALE: There is no such provision, and the national debt continues to grow.
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POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 01 - LO: 1-01
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:
k United States - AK - AICPA: FN-Measurement k k k k k k
KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
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DATE MODIFIED:
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3. Revenue-neutral tax laws reduce deficits.
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a. True
b. False
ANSWER: False
RATIONALE: They do not reduce deficits but do not aggravate the problem.
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POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: kTrue / False k k
Page k1
,Chapter 01: Understanding and Working with the Federal Tax Law
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: k CPET.SWFT.2025.LO: 1-01 - LO: 1-01
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NATIONAL STANDARDS: k k United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:k United States - AK - AICPA: FN-Measurement
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KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
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DATE MODIFIED:
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4. Longer class lives for depreciable property and the required use of the straight-line method of depreciation would
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likelydampen the tax incentive for purchasing capital assets.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: kTrue / False k k
HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:k United States - TX - AICPA: FN-Reporting k k k k k k
United States - AK - AICPA: FN-Research k k k k k k
KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
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5. The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United
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StatesCode.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:k United States - AK - AICPA: FN-Research k k k k k k
United States - TX - FN-Reporting k k k k k
KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
k 3/1/2024 1:43 PM k k
Page k2
,Chapter 01: Understanding and Working with the Federal Tax Law
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6. The favorable treatment of research and development expenses (via amortization deductions and tax credits) is
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one means of controlling the economy.
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a. True
b. False
ANSWER: False
RATIONALE: This favorable treatment encourages certain activities (e.g., fostering
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technologicalprogress). It does not control the economy.
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POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:k United States - AK - AICPA: FN-Measurement k k k k k k
KEYWORDS: Bloom's: Understand k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
k 3/1/2024 1:43 PM k k
7. The encouragement of private-sector pension plans can be justified under the encouragement of certain industries.
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a. True
b. False
ANSWER: False
RATIONALE: Justified under social considerations and encouragement of certain activities (e.g., savings).
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POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
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HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
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STATE STANDARDS:k United States - TX - AICPA: FN-Measurement k k k k k k
United States - AK - AICPA: FN-Reporting k k k k k k
KEYWORDS: Bloom's: Understand k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
k 3/1/2024 1:43 PM k k
8. One Internal Revenue Code section enables shareholders in a small business corporation to obtain an
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ordinarydeduction for any loss recognized on a stock investment.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
Page k3
, Chapter 01: Understanding and Working with the Federal Tax Law
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QUESTION TYPE: k True / False k k
HAS VARIABLES:
k False
LEARNING OBJECTIVES: k CPET.SWFT.2025.LO: 1-02 - LO: 1-02
k k k k k
NATIONAL STANDARDS: k k United States - BUSPROG: Comprehension - BUSPROG: Comprehension
k k k k k k k
STATE STANDARDS:
k United States - TX - AICPA: FN-Measurement
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United States - AK - AICPA: FN-Reporting
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KEYWORDS: Bloom's: Remember k
OTHER: Time: 2 min. k k
DATE CREATED:
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DATE MODIFIED:
k 3/1/2024 1:43 PM k k
9. One of the justifications for the enactment of the tax law governing corporate reorganizations was the economic
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benefitit would provide businesses (including making them more efficient).
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: k True / False k k
HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
k k k k k k k
NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
k k k k k k k k k
STATE STANDARDS:
k United States - AK - AICPA: FN-Reporting k k k k k k
KEYWORDS: Bloom's: Understand k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
k 3/1/2024 1:43 PM k k
10. Although a corporation is subject to a Federal income tax, a partnership is not.
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a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: True / False
k k k
HAS VARIABLES:
k False
LEARNING OBJECTIVES: CPET.SWFT.2025.LO: 1 02 - LO: 1-02
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NATIONAL STANDARDS: United States - BUSPROG: Comprehension - BUSPROG: Comprehension
k k k k k k k k k
STATE STANDARDS:
k United States - AK - AICPA: FN-Reporting k k k k k k
KEYWORDS: Bloom's: Understand k
OTHER: Time: 2 min. k k
DATE CREATED:
k 1/31/2024 10:55 AM k k
DATE MODIFIED:
k 3/1/2024 1:43 PM k k
Page k4
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