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