wages increase a. True b. False 2. The Federal excise tax on cigarettes is an example of a prop ortional tax. a. True b. False 3. Mona inherits her mother's personal residence, which she e onverts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levie d on the properties a. True b. False 4. An excise tax is often used to try to influence behavior. a. True b. False 5. Two persons who live in the same state but in different cou nties may not be subject to the same general sales tax rate. a. True b. False 6. One of the major reasons for the enactment of the Federal e state tax was to prevent large amounts of wealth from being accumulated within a family unit. a. True b. False 7 Rules of tax law do not include Revenue Rulings and Reve nue Procedures a. True b. False 8. In recent years, Congress has been relatively successful in s implifying the Internal Revenue Code a. True b. False 9. A Revenue Ruling is a judicial source of Federal tax law. a. True b. False 10 Revenue Procedures deal with the internal management pr actices and procedures of the IRS. a. True b. False Technical Advice Memoranda may not be cited as preceden ts by taxpayers. a. True b. False 12. Three judges will normally hear each U.S. Tax Court case. a. True b. False 13. A partnership owned at least 80% by a corporation is includ ed in a consolidated group's U.S. income tax return. a. True b. False a. True b. False 14. Temporary differences are book- tax differences that appear in both the GAAP financial statements and the Federal income tax return but not in the same reporting period. a True b. False 15. Permanent differences include items that appear in the Fed eral income tax return as income or deduction and in the GAAP financial statements as revenue or expense but in different reporting periods. a. True b. False a. True 16. The current tax expense reported on the GAAP financial st atements generally represents the taxes actually payable to domestic or foreign governmental authorities. b. False 17. Judy is a cash basis attomey. This year, she performed serv ices in connection with the formation of a corporation and received stock with a value of $4,000 for her services. By the end of the year, the value of the stock had decreased to $2,000 She continued to hold the stock. Judy must recognize $4,00 0 of gross income from the stock for the current year. a. True b. False 18 The fact that the accounting method the taxpayer uses tom easure income is consistent with GAAP does not ensure that the method will be acceptable for tax purposes. a. True b. False 19. A sole proprietor purchased an asset for $1.000 in 2019. Its value was $1.500 at the end of 2019. In 2020, the taxpayer sold the asset for $1,400. In In 2020, the proprietor calized a taxable gain of S400 but an economic loss of $100. a. True b. False 20 In December 2018, Mary collected the December 2018 and January 2019 rent from a tenant. Mary is a cash basis taxpayer. The amount collected in December 2018 for the 2 019 rent should be included in her 2019 gross income. a. True b. False 21. The Code does not specifically define what constitutes a tra de or business. a. True b. False