QuestionTXX 5772 –1. The sales tax is the perfect example of a (or an):

TXX 5772 –

1. The sales tax is the perfect example of a (or an):

a. direct tax

b. income tax

c. head tax

d. progressive tax

e. none of the above

2. In the McDonell case, the first determination the Tax Court made was:

a. it excluded the benefit of the trip from taxpayer’s gross income.

b. that the trip was not a prize or award under Section 74.

c. it included the benefit of the trip in the taxpayer’s gross income.

d. that the trip was a prize or award under Section 74.

e. none of the above.

3. Congress’s purpose in enacting Section 117 was:

a. to provide a clear-cut method for distinguishing between taxable and non-taxable educational grants.

b. to include in gross income amounts received as grants by degree candidates.

c. to clearly define the term scholarships.

d. to clearly define educational expenses for purposes of educational grants.

e. none of the above.

4. If an employee receives an amount from his or her employer for educational assistance, he or she may exclude a certain amount. The code Section which permits this is Section:

a. 74

b. 102

c. 132

d. 274

e. none of the above.

5. Which of the following statements is false?

a. In all situations, the basis of property in the hands of a done is the same basis the property had in the hands of the donor.

b. A major revision of the 1954 Internal Revenue Code occurred in 1969.

c. “Gestalt,” in the context of learning the Internal Revenue Code “Code” refers to the phase of a person’s understanding when one begins to understand the structure or pattern of the Code.

d. Gross income does not include the amount of any damage received on account of personal injuries.

e. all of the above are true.

6. Kent Knobe gave Larry Lawson a gift having a fair market value of $133,000 on February 14, 2012. Kent had purchased the gift property in 2004 for $93,000, the taxable gift was $120,000, and paid a gift tax of $15,000. What is Larry’s basis in the property?

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