Chapter 01: Understanding and Working with the Federal Tax Law
Indicate whether the statement is true or false.
1. Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.
a. True
b. False
2. The U.S. Federal government has a provision in the Constitution that precludes deficit spending.
a. True
b. False
3. Revenue-neutral tax laws reduce deficits.
a. True
b. False
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
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
6. The favorable treatment of research and development expenses is one means of controlling the economy.
a. True
b. False
7. The encouragement of private-sector pension plans can be justified under the encouragement of certain industries.
a. True
b. False
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
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
10. Although a corporation is subject to a Federal income tax, a partnership is not.
a. True
b. False
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