1. Regarding the taxing powers of the federal government, the U.S. Constitution requires that:
a. taxes imposed by Congress must apply uniformly throughout the U.S.
b. no direct taxes may be imposed on income
c. all revenues from the federal income tax must be apportioned to the population of the states from which they
were collected
d. all of the above
2. Which of the following is an administrative source of the Federal tax law issued by the IRS?
a. court rulings
b. Internal Revenue Code
c. tax treaties
d. revenue rulings
e. none of the above
3. The first Internal Revenue Code was:
a. the Internal Revenue Code of 1939
b. the Internal Revenue Code of 1954
c. the Revenue Act of 1913
d. none of the above
4. As of 2011, the percentage of U.S. households who did not pay any Federal income tax was roughly:
a. 74 percent
b. 30 percent
c. 47 percent
d. All U.S. houses pay some Federal income tax.
5. A “tax protester” is:
a. a person who files a ‘frivolous’ return with the IRS
b. a person who brings a “frivolous” matter before the Tax Court
c. can be subject to a penalty for frivolous Tax Court petitions
d. all of the above
e. only a and b
6. The overriding purpose of tax treaties is to:
a. create ‘tax havens’
b. minimize tax liability of multinational corporations
c. require business taxpayers to file returns in all countries in which they operate
d. eliminate the ‘double taxation’ that a taxpayer would face if his or her income were subject to tax in both
countries
7. Which of the following issues is NOT addressed by tax treaties?
a. what tax disclosures must be made by a visitor to a host country
b. treatment of business and investment income earned by a foreign visitor in the United States
c. treatment of business and investment income earned by a foreign citizen in his home country
d. how to compute the taxable amount in the host country
e. all of the above
8. Which of the following statements is CORRECT regarding tax treaties:
a. They are authorized by the U.S. Constitution.
b. They are usually initiated by the State Department, not the Treasury.
c. The U.S. can have multiple types of tax treaties with one country.
d. All of the above statements are correct.
9. P.L. 107–16 is the citation for:
a. the Conference report on the 16th public law enacted in the 107th Congress
b. the 16th public law enacted in the 107th Congress
c. a public law enacted by Congress but not signed by the President
d. none of the above
10. In the House of Representatives, tax law changes are primarily considered by:
a. the Finance Committee
b. the Joint Conference Committee
c. the Budget Committee
d. the Ways and Means Committee
11. If any differences exist between the House- and Senate-passed versions of a tax bill, the bill is referred to:
a. the Finance Committee
b. the President
c. the Joint Conference Committee
d. the Supreme Court
12. Each Congress lasts for:
a. 2 years
b. 1 year
c. 3 years
d. 4 years
13. Which of the following statements is CORRECT regarding the enactment into law of a tax bill?
a. A tax bill must always be signed by the President to become law.
b. A tax law must be approved by the Treasury Department.
c. A tax law must either be signed into law by the President or Congress must override a presidential veto of the
proposed law.
d. only b and c
14. Which of the following statements is CORRECT regarding Committee Reports?
a. They are published in the Internal Revenue Bulletin.
b. They are produced by the Treasury Department.
c. They explain the elements of proposed tax law changes and reasons for the changes.
d. all of the above
e. only a and c
15. Which of the following is CORRECT regarding the Floor Debate Report?
a. It is contained in the Congressional Record.
b. Technical or detailed information excluded from the committee report(s) may be included
c. It summarizes the discussions made in the House or the Senate concerning a proposed tax bill.
d. All of the above statements are correct.
16. A subtitle of the Internal Revenue Code:
a. is indicated by a capital letter, such as “Subtitle A”
b. relates to a well-defined area of the law
c. is used as a short-hand reference to describe types of corporations
d. only a and b
e. all of the above
17. Which of the following statements is INCORRECT regarding the structure of the Internal Revenue Code:
a. Code section numbers start over in each chapter.
b. Each Code section is used only once in the Internal Revenue Code.
c. Code sections inserted between existing section numbers are indicated by adding a capital letter to the Section
number (e.g. Section 25A)
d. The Internal Revenue Code is Title 26 of the United States Code.
18. The current Internal Revenue Code is the:
a. Internal Revenue Code of 2011
b. Internal Revenue Code of 1986
c. Internal Revenue Code of 1954
d. none of the above
19. Subtitle A of the Internal Revenue Code deals with:
a. estate and gift taxes
b. employment taxes
c. income taxes
d. excise taxes
20. Which of the following sections of the Internal Revenue Code deal with partnerships?
a. the 700s
b. the 300s
c. Section 162
d. Section 501
21. Code Section 61 relates to:
a. deductions for adjusted gross income
b. the definition of gross income
c. corporate tax rates
d. the deduction for state taxes
22. Which of the following statements is INCORRECT regarding the reasons tax researchers may have difficulty in
interpreting the Internal Revenue Code:
a. Code sections can appear to conflict.
b. Definitions can be significantly different from the common use of a term.
c. All exceptions to a Code section are addressed within that same section.
d. Frequently, phrases modify percentage or dollar amounts.
23. A “technical corrections act” is:
a. A set of changes made by IRS to fit new tax law provisions into the Code.
b. An act passed by Congress to remove errors in implementing and interpreting the new provisions of a tax law.
c. The act which provides the effective dates for a new tax law.
d. None of the above.
24. Which of the following statements is INCORRECT regarding effective dates in the Internal Revenue Code:
a. All sections of a new tax law go into effect at the same time.
b. New Code provisions may not go into effect immediately upon adoption by Congress.
c. Some effective dates can precede passage of the act.
d. All of the above are correct.
25. Which of the following statements is CORRECT regarding the definition of terms in the Internal Revenue Code?
a. All definitions are included in Section 7701.
b. Definitions are always included within the Code section to which they apply.
c. Definitions are written into the Code by the IRS rather than included in tax laws passed by Congress.
d. Sometimes, a researcher may need to consult the regulations to find a complete definition of a term.
26. The 16th Amendment to the U.S. Constitution authorized the imposition of a Federal income tax.
a. True
b. False
27. Statutory sources of Federal tax law come out of the legislative branch of the U.S. government.
a. True
b. False
28. Circuit Courts are administrative sources of the Federal tax law.
a. True
b. False
29. In Pollock v. Farmers’ Loan and Trust Co., the Supreme Court held that the income tax was unconstitutional
because it was a constitutionally prohibited ‘direct tax’.
a. True
b. False
30. Historically, the 1913 income tax was a tax on wealthy and high income taxpayers.
a. True
b. False
31. Taxpayers who file frivolous returns are subject to a $25,000 fine.
a. True
b. False
32. Congress cannot override a Presidential veto of a tax bill.
a. True
b. False
33. The North American Free Trade Agreement (NAFTA) is a non–tax international treaty which addresses some tax–
related issues.
a. True
b. False
34. Treaties may expire because of a specific congressional time limitation.
a. True
b. False
35. Subparagraphs are the major divisions of the Internal Revenue Code covering such broad topics as Income Taxes,
and Estate and Gift Taxes.
a. True
b. False
36. When a Code provision and a provision under a treaty conflict, the one adopted earlier in time generally rules.
a. True
b. False
37. Tax treaties are agreements negotiated between countries concerning the treatment of entities subject to tax in both
countries.
a. True
b. False
38. The Joint Conference Committee is called on to resolve differences between the House Ways and Means
Committee version and the full House version of tax legislation.
a. True
b. False
39. Section 121(B)(2)(a)(b)(iii) would be a correct type of Code citation.
a. True
b. False
40. Most tax legislation begins in the House of Representatives.
a. True
b. False
41. The ‘General Explanation’ of tax legislation, called the “Blue Book,” is prepared by the Joint Conference Committee.
a. True
b. False
42. Trade or business deductions are contained in Code Section 62.
a. True
b. False
43. Whenever a major new tax law is passed, CCH and RIA both publish the related Committee Reports.
a. True
b. False
44. A report of Floor Debate is included in the Congressional Record and may include some detailed or technical
information that is excluded from a Committee Report.
a. True
b. False
45. The term ‘not less than 50’ represents only those numbers which are more than 50.
a. True
b. False
46. List several issues that tax treaties commonly address.
47. What is a tax protester and what types of sanctions are tax protesters subject to?
48. What information is included in the history of a Code section?
49. Describe the steps in the legislative process by which a tax bill becomes law.
