Federal Income Taxation: An Overview

Chapter 1—Federal Income Taxation - An Overview

MATCHING

Match each term with the correct statement below.
a.
Average tax rate
b.
Effective tax rate
c.
Horizontal equity
d.
Marginal tax rate
e.
Progressive rate structure
f.
Proportional rate structure
g.
Regressive rate structure
h.
Tax avoidance
i.
Tax evasion
j.
Vertical equity

1. A tax rate that increases as the tax base increases.

2. A tax rate that decreases as the tax base increases.

3. Fraudulent methods are used to reduce the actual tax liability.

4. A tax rate that remains the same at all levels of the tax base.

5. Tax planning using legal methods to minimize the tax liability.

6. The tax rate that will apply to the next dollar of taxable income.

7. The tax rate obtained by dividing total tax liability by taxable income.

8. The tax rate obtained by dividing total tax liability by economic income.

9. The result when two similarly situated taxpayers are taxed the same.

10. The result when two differently situated taxpayers are taxed differently but fairly.

1. ANS: E PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

2. ANS: G PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

3. ANS: I PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

4. ANS: F PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

5. ANS: H PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

6. ANS: D PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

7. ANS: A PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

8. ANS: B PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

9. ANS: C PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

10. ANS: J PTS: 1 DIF: Easy
NAT: AICPA Measurement | AACSB Analytic

Match each term with the correct statement below.
a.
Ad valorem tax
b.
Deduction
c.
Excise tax
d.
Exclusion
e.
Expense
f.
Gain
g.
Loss
h.