Solve the next questions:

12.The Federal income tax applicable to corporations, as contrasted with that applicable to individuals:

a. Also requires the determination of adjusted gross income(AGI)

b. Allows a deduction for personal and dependency exemptions

c. Requires the determination of taxable income

d. Also allows a standard deduction

e. None of the above

13. A characteristic of FICA is that:

a. It is imposed only on an employer

b. It has two components made up of Social Security and FUTA

c. A 16-year-old son who works for his parents is not covered

d. Over the years both the base amount and the applicable rates have declined

e. None of the above

14. A characteristic of the audit process it:

a. Every taxpayer has the same chance of having his or her return selected for audit by the IRS

b. In order to avoid controversy, the IRS will not act on information provided by informers

c. An office audit is conducted at the business premises of the taxpayer

d. If the agent conducting the audit issues an RAR (Revenue Agents Report, this means that the taxpayer is being assessed a tax deficiency

e. None of the above

15. A characteristic of the failure to pay penalty is:

a. The penalty is 5% per month (up to a maximum of 25%)

b. The penalty is 0.5% per month (up to a maximum of 25%)

c. The penalty is 30% of the underpayment

d. The burden of proving the failure to pay is on the IRS

e. None of the above

16. Social considerations can be used to justify:

a. Employer deductions for contributions to employee retirement plans

b. Faster tax write-offs of pollution control facilities

c. Allowing taxpayers to carry back and carry over net operating losses

d. Allowing certain small business corporations a special election which avoids the corporate income tax

d. None of the above

17. Some of the law is justified on the grounds that it simplifies the task of the IRS in collecting the revenue and administering the law (i.e., administrative feasibility). Examples include:

a. Income tax withholding on wages

b. Prepaid income is taxed when received

c. Interest and penalties available to the IRS for noncompliance

d. Limitations imposed on the deductibility of personal casualty losses

e. All of the above

18. For a taxpayer to be eligible for the earned income credit, the taxpayer may be required to have a qualifying child. A qualifying child must meet the following tests:

a. Relationship test

b. Residency test

c. Age test

c. All of the above must be met

e. None of the above must be met

19.An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

a. Form W-2

b. Form W-3

c. Form W-4

d. Form 941

e. None of the above

20. In determining the number of withholding allowances on an employeesForm W-4, the following is not true:

a. Withholding allowances may be claimed for the taxpayers spouse and dependents

b. Special withholding allowances may be claimed in certain situations

c. An additional allowance is available if the taxpayer expects to claim a credit for child and dependent care expenses.

d. The number of withholding allowances must agree with the number of personal and dependency exemptions claimed on the taxpayers income tax return.

e. All of the above are true