1. In order to limit the extent that "front-loaded" payments may qualify as alimony, a recapture rule may apply to the part of the payments made in the first two post-separation years that exceed $25,000 a year.
a. True
b. False
2. Paul and Joan divorced in 2012. They have two children, ages five and ten. The divorce decree requires Joan to pay $300 a month to Paul and does not specify the use of the money. According to the decree, the payments will stop after the children reach 18. Joan may deduct payments as alimony.
a. True
b. False
3. Bob Bixby gave his daughter, Jane, his personal residence with an adjusted basis to him of $260,000 and a fair market value of $250,000. Jane lived in the house for two years and then sold it for $240,000. As a result of the sale, Jane will:
a. Report no gain or loss
b. Report a $10,000 loss
c. Report a $20,000 loss
d. Have her father report a $20,000 loss
e. none of the above
4. A Treasury Regulation contains the following statement: "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the facts." This statement refers to which of the following concepts?
a. the economic reality test
b. fair allocation of income and expenses
c. transfer pricing rule
d. fair accounting in order to reflect true accretion to income
e. none of the above
5. Upon winning an award, the recipient, and if he or she wants to avoid inclusion in income, he or she must:
a. disavow the award in favor of a charitable or governmental entity prior to the award being granted.
b. disavow the award in favor of a charitable or governmental entity within 30 days of the date the award is granted.
c. disavow the award in favor of a charitable or governmental entity within 45 days of the date the award is granted.
d. disavow the award in favor of a charitable or governmental entity within 90 days of the date the award is granted.
e. none of the above.
6. All of the following statements are true, except:
a. Retroactive income taxes may not be passed by Congress because they are unconstitutional.
b. In general, the Treasury Department may not issue retroactive regulations.
c. Robert Hall was one of the academic proponents of the flat tax.
d. The first internal-revenue law was enacted in March 1791.
e. all of the above are true.
7. The formal origin of tax law is a bill which is introduced in the House of Representatives.
a. Commonly, the bill passed by the House is passed by the Senate almost identically to the way it was passed by the House.
b. Commonly, the president passes the bill, introduced in the House; prior to the House passing it, but before there is a chance that it be vetoed.
c. Commonly, the Treasury Department has little to do with the drafting of a bill having to do with federal taxation.
d. Commonly, the primary author of a tax bill is the majority leader of the House.
e. none of the above.
8. In 1913, the XVI Amendment to the U.S. Constitution gives Congress the power to tax.
a. True
b. False
9. Sometimes, albeit rarely, federal income taxation statutory law can be found in other federal statutes (other than the Internal Revenue Code). An example of this is
a. deductibility of office in the home deduction for anesthesiologists
b. deductibility of moving expenses of armed forces personnel
c. deductibility of passive real estate losses in excess of revenue
d. deductibility of excess revenue from oil from excess costs
e. none of the above
10. The text states that reading the Internal Revenue Code cold is not very productive. They posit that it must be read:
a. in the abstract
b. with a philosophical eye
c. with a specific circumstance in mind
d. with general thoughts in mind
e. with an open mind
11. Which of the following in not a payment deductible as alimony?
a. Payments for life insurance premiums required by the divorce decree.
b. Payments for medical expenses of your spouse under the terms of the divorce decree.
c. Half of the mortgage payment on a home jointly owned with your ex-spouse when required by the divorce decree
d. Payments for child support required by the divorce decree