Question

I. TRUE OR FALSE (20 POINTS) 1. Partnerships may adopt any fiscal tax year if the tax year is used consistently. 2. The IRS will automatically grant a request for a change in tax years, provided the proper form is filed in a timely manner. 3. "Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays. 4. Generally, cash basis taxpayers must account for payments of prepaid interest using the accrual method. 5. An example of a hybrid method of accounting is one where the taxpayer recognizes its income using the accrual method and recognizes the business expenses using the cash method of accounting. _6. An accrual-method taxpayer cannot deduct unpaid expenses incurred in a transaction with a related party who files his tax return using the cash-basis of accounting. 7. If an employee does not complete a Form W-4, the employer must withhold tax as if the employee were single with no exemptions. 8. Employees with self-employment income who also have W-2 wage income are not required to make estimated tax payments regardless of their amount of income. 9. Any self-employed taxpayer whose current total tax exceeds his withholdings for the year by $1,000 or more, must make quarterly estimated payments. 10. The individual alternative minimum tax liability may not exceed the regular tax liability of the taxpayer. _11. When taxpayers overpay FICA taxes, the excess taxes may be claimed as a credit against tax liability. _12. Gambling winnings must be reported to the IRS using form 1099. 13. Dividend income is not subject to the self-employment tax. 14. The FUTA tax is a voluntary unemployment tax which an employer may or may not wish to contribute towards _15. Household employers are not required to pay FUTA taxes on part-time household employees. 16. If the net unearned income of a minor child is to be taxed at the parents' tax rate, the parents may elect, under certain conditions, to include the child's gross income on their tax return. 17. Employers are required to deposit withheld taxes on the date their employees file their income tax returns.

Answer 1

1. False

2. True

3.True

4.False

5.True

6.False

7.True

8.False

9.True

10.True

11.True

12.False

13.True

14.True

15.False

16.False

17.False