Ch.1 Intro to Taxation - Basic Tax model + Overview of Estate & GIft Taxation. Exam Questions With Correct Answers
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Course
Tax
Institution
Tax
Ch.1 Intro to Taxation - Basic Tax model +
Overview of Estate & GIft Taxation. Exam
Questions With Correct Answers
Why do we have Taxes? - answer2 Reasons:
1) Main reason we have taxes To generate revenue so we can run our government
2) Social Reasons - To motivate us (U.S Citizens) to do thin...
All the papers that have your interests and dividends, capital gains, etc gets send to the gov then gov
compares it to your taxes return. If they don't match it takes them 2 years, then you get an AUTOMATIC
audit called a CP 2000
Taxes product what? - answer✔Taxes produce our revenue for government operations, also is a huge
part of the tax law that influences us to do what the gov needs us to do
What happened during the great recession of 2008/2009? - answer✔A lot of revisions were put into the
tax code in order to encourage investment in businesses
What are the 6 Key Tax Functions? - answer✔1) Compliance - In forms file (Prof does this)
2) Planning
3) Financial Reporting - 10Ks, 10Qs
4) Controversy - IRS
5) Cash Management
6) Data Analysis
Why are payroll taxes a big chunk of the government? - answer✔Bc of big chunk of the gov budget is
social security, medicare, medical, medicaid which are all funded by payroll taxes
Ex: When you get a job, each yr you have to pay your social security tax, unemployment tax, and state
tax.
Thus, all these fund social security benefits
What is a Flat Tax? - answer✔A flat tax is where everyone will pay the same rate no matter what your
total income is
What is a progressive tax? - answer✔A progressive tax is where the more you make, the more you pay
in taxes
Ex: California is a progressive tax state
Real Life: Under the TCGA, tax cuts that Trump signed in, corporate income tax became proportional
instead of the o.g progressive. However, U.S citizens are still under progressive taxes.
What are the eight major types of taxes? - answer✔1) Property Taxes
2) Transaction Taxes
3) Taxes on transfers on Death
4) Gift Taxes
5) Income Taxes
6)
How should you study Taxation? - answer✔The goal of studying taxation is being able to recognize
issues (or transactions) that have tax implications and when possible, trying to understand the
justification
What should you focus on while studying taxation? - answer✔Focus on understanding the rules and the
why(s) behind them, rather than memorizing the rules and terms.
The rules and terms become more meaningful when you think about why they exist for that particular
tax
Aim for understanding, NOT memorization
What are some ways individuals (U.S citizens interact with taxes? - answer✔1) Individuals pay and file
taxes willingly (aka tax compliance)
2) Individuals willingly engage in tax planning bc of there desire to maximize after-tax wealth
3)
If a U.S citizens tax return is audited OR they do not pay their taxes, what will happen? - answer✔What
will happen next is taxpayers will deal with the IRS (The Internal Revenue Service) or their state tax
agency (tax controversy)
What is Tax Controversy? - answer✔Tax controversy is an area of legal practice involving tax disputes
between collection entities such as the U.S IRS and taxpayers which an result in an audit for the
individual.
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