Indicate which of the following statements concerning the following tax rate structures is/are correct.

	When Income	Total Tax
	Equals	Equals
Structure #1	10,000	600
	100,000	5,000
Structure #2	15,000	900
	75,000	4,500
Structure #3	13,000	975
	86,000	6,600

I.	Tax Structure #1 is proportional.
II.	Tax Structure #1 is regressive.
III.	Tax Structure #2 is progressive.
IV.	Tax Structure #3 is progressive.

	a.	Only statement I is correct.
	b.	Only statement III is correct.
	c.	Only statements I and II are correct.
	d.	Only statements II and IV are correct.

Clark, a single taxpayer with expected taxable income of $190,000, needs your advice on an investment decision. Clark wants to invest $10,000 in long-term bonds. Clark can obtain a 6% return by investing in 10-year Ford Motors' bonds. What is the minimum interest rate that Clark should demand from an investment in State of Tennessee bonds of identical risk and duration?

		a. 4.08%
		b. 4.68%
		c. 9.00%
		d. 10.00%

Based on the following information, what is the 2020 taxable income for a married couple with two children?

Total income	$120,000
Excludable income	2,000
Deductions for AGI	5,000
Allowable itemized deductions	8,000

		a. $85,000
		b. $88,200
		c. $94,000
		d. $105,000
		e. $113,000

Jennifer is in a 22% marginal tax rate. Her tax liability (before tax credits) for the year is $5,200. Jennifer is entitled to a $2,000 child tax credit. The credit will reduce her tax liability by:

		a. $2,000.
		b. $440 (2,000 x 28%)
		c. $1,560.
		d. None of the above.

Celeste currently works 40 hours per week. When Dana hears that Congress has increased federal income taxes from 25 percent to 28 percent for her level of income, she decides to increase her work load to 45 hours per week. Celestes s response is an example of:

		a. the income effect.
		b. the substitution effect.
		c. vertical equity.
		d. horizontal equity.

A property tax

I.	is levied on the value of property.
II.	is referred to as ad valorem tax.
III.	on personal property is more common than a tax on real property.
IV.	is based on assessed value rather than actual transactions.

		a. Only statement I is correct.
		b. Statements II and III are correct.
		c. Statements I, II, and IV are correct.
		d. Statements I, II, III, and IV are correct

Melanie works at the SYZ Company as a financial planner. Her salary for 2020 is $400,000. Melanies share of her social security tax is $30,600 ($400,000 x 7.65)

		a. True.
		b. False.

Marcus gifted each of his children $1,000,000. The children all immediately spent all of the money. After the transfer he made an appointment to meet with a tax professional in order to determine whether he would have to file any gift tax returns. He was also interested in learning if the gifts would cause him to have any gift tax liability. Marcus was not pleased that his children spent all the money. At this point, Marcuss transaction is an example of:

		a. an open transaction.
		b. a closed transaction.

If Lindsey, a calendar year taxpayer, requests an extension to file her tax return, the latest she could pay her tax due without penalty is:

		a. April 15th.
		b. October 15th.
		c. August 15th.
		d. November 15th.

Jake earns $100,000 and pays $20,000 in taxes. John earns $100,000 and pays $10,000 in taxes. Which concept that best applies to these taxpayers?

		a. Horizontal equity.
		b. Vertical equity.
		c. Both concepts apply since Jake and John are in the same tax position and pay different amounts of tax.

Bobs employer offers a nondiscriminatory cafeteria plan. Each employee may select $4,000 of benefits from a menu of benefits. Bob chooses to receive health insurance ($3,000), dental insurance ($600), and cash ($400). Based on these facts, Bob will not have to recognize any income related to the benefits received.

		a. True.
		b. False.

Lena, a single individual, purchased a personal residence on January 19, 2019. On February 20, 2020, Lena sells the residence and realizes a $300,000 gain. Lena lived in the residence the entire time she owned it. How much gain will Lena have to recognize on the sale of her personal residence?

		a. Zero.
		b. $50,000.
		c. $300,000.
		d. None of the above.