Answer the questions that follow by clicking on the right answer. When
you are done, click on the "Grade Me!" button at the bottom. When you
do this, the Results page will automatically appear with the results of
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True
a
False
b
2. Interest may be abated on erroneous refunds
in excess of $50,000.
True
a
False
b
3. The exemption credit for disability trusts
is increased from $10 to the amount available for individual taxpayers,
beginning with the 2004 taxable year.
True
a
False
b
4. Beginning with the 2004 taxable year,
the percentage of net operating losses that taxpayers may carry forward
is increased from 65% to 100%.
True
a
False
b
5. A California superior court ruled that
the return of capital on sales of marketable securities is not includable
in a taxpayer's apportionment sales factor.
True
a
False
b
6. Beginning with the 2003 taxable year,
water's-edge elections are valid for 84 months.
True
a
False
b
7. California imposes new penalties and
increases existing penalties relating to abusive tax shelters.
True
a
False
b
8. Effective January 1, 2004, all California
municipalities may impose a sales and use tax at a rate of up to 1.5%.
True
a
False
b
9. The Managed Audit Program expired January
1, 2003, and has not been reinstated.
True
a
False
b
10. The basic California individual tax
form is Form 540.
True
a
False
b
11. Filing status on a California return
is usually the same as on the federal return.
True
a
False
b
12. California and federal depreciation
usually differ.
True
a
False
b
13. California does not recognize Subchapter
S corporations.
True
a
False
b
14. California itemized deductions are
based on federal itemized deductions, with some exceptions.
True
a
False
b
15. A credit is allowed for federal income
taxes paid.
True
a
False
b
16. The due date for filing Form 540 is
April 15.
True
a
False
b
17. Members of the armed forces are allowed
an additional 60 days to file.
True
a
False
b
18. Underpayment penalties are based on
the federal rate.
True
a
False
b
19. Non-residents who earn money in California
are not subject to income tax.
True
a
False
b
20. Single taxpayers are required to use
their federal filing status.
True
a
False
b
21. Part-year resident shareholders qualify
for a credit for taxes paid to other states on S corporation income
taxed by California.
True
a
False
b
22. Rewards from a government authorized
crime hotline are excluded from gross income.
True
a
False
b
23. California has discontinued the long-term
care credit.
True
a
False
b
24. Returns are filed with the franchise
tax board.
True
a
False
b
25. The failure to file penalty is 5% per
month up to a maximum of 25%.
True
a
False
b
26. California personal income tax was
enacted in 1913.
True
a
False
b
27. Income tax rates run from 1% to 9.3%.
True
a
False
b
28. Residency and domicile mean the same
thing.
True
a
False
b
29. For the 2001 tax year, liability is
incurred if the AGI of a single taxpayer with no dependents is $9664
or more.
True
a
False
b
30. California Form 540A is similar to
federal Form 1040A.
True
a
False
b
31. A blind person could file using Form
540 2EZ.
True
a
False
b
32. Generally, if one spouse is a resident
and one is a non-resident, they may file a joint non-resident return.
True
a
False
b
33. California does not yet have an E-File
program.
True
a
False
b
34. The FTB may allow taxpayers experiencing
financial difficulties to pay their tax on the installment plan.
True
a
False
b
35. The FTB now accepts credit cards.
True
a
False
b
36. California tax rates are the same for
an individual and a married person filing separately.
True
a
False
b
37. Children under 14 never have to pay
state income tax.
True
a
False
b
38. Credit is allowed for tax paid to other
states if the tax was based on net income.
True
a
False
b
39. Generally, if a husband and wife file
separate returns, the credit for a married couple may be taken by
either or divided equally between them.
True
a
False
b
40. The manufacturer's investment credit
is 6% of the qualified cost.
True
a
False
b
41. California includes Social Security
payments in gross income.
True
a
False
b
42. California law is the same as federal
law regarding prizes and awards.
True
a
False
b
43. Currently, a single taxpayer may exclude
from gross income up to $250,000 in gain on the sale of a residence.
True
a
False
b
44. In general, income earned by either
spouse is considered community property.
True
a
False
b
45. Commuting expenses from home to work
are generally tax deductible.
True
a
False
b
46. An ordinary loss deduction is allowed
for a loss that is not compensated for by insurance.
True
a
False
b
47. California has the equivalent of a
federal Section 179 election.
True
a
False
b
48. California law allows a five-year carryover
of contributions that exceed the percentage limit.
True
a
False
b
49. Research and experimental expenditures
must be amortized over a 60-month period.
True
a
False
b
50. Expenditures to increase the circulation
of a periodical are deductible and do not have to be capitalized.
True
a
False
b
51. California generally follows federal
law regarding accounting periods and methods.
True
a
False
b
52. California requires capitalization of
interest and taxes incurred during the construction of real property.
True
a
False
b
53. California law, unlike federal law,
does not apply a lower rate to capital gains.
True
a
False
b
54. In general, the transfer of property
to a spouse is a taxable event.
True
a
False
b
55. The gain or loss on the sale of bonds
yielding tax-exempt interest is not tax exempt.
True
a
False
b
56. California law regarding the sale of
property used in business is the same as federal law.
True
a
False
b
57. The basis of property acquired in a
tax-free exchange is the same as that of the property exchanged.
True
a
False
b
58. Redeemable ground rents are treated
as being the equivalent of a mortgage.
True
a
False
b
59. Generally, estates and trusts make
estimated tax payments in the same manner as individuals.
True
a
False
b
60. Under California law, a charitable
trust is not treated as a corporation.
True
a
False
b
61. Partnership returns are made on Form
565.
True
a
False
b
62. Tax preparers are required to maintain
a $5,000 bond.
True
a
False
b
63. A deficiency assessment becomes final
after 60 days if it is not protested.
True
a
False
b
64. If no return is filed, the statute
of limitations is increased to six years.
True
a
False
b
65. Interest may be assessed on an erroneous overpayment to a taxpayer.
True
a
False
b
66. Employers are not legally required
to withhold tax on California wages.
True
a
False
b
67. Generally, suits for a refund may be
filed only after a claim has been filed.
True
a
False
b
68. A "closing agreement" is
binding and may not be reopened unless fraud is involved.
True
a
False
b
69. California imposed the corporation
income tax in 1937.
True
a
False
b
70. Franchise tax and income tax are both
based on net income.
True
a
False
b
71. All corporations incorporated or doing
business in California are subject to franchise tax.
True
a
False
b
72. Most California corporations are not
subject to income tax.
True
a
False
b
73. California does not recognize federal
Subchapter S filing status.
True
a
False
b
74. Charitable trusts are treated as corporations
for tax purposes.
True
a
False
b
75. A tax-exempt organization is never
allowed to do any lobbying.
True
a
False
b
76. California allows "whole dollar"
reporting.
True
a
False
b
77. Corporate income and franchise tax
are only imposed on income from within the state.
True
a
False
b
78. California imposes an alternative minimum
tax on Subchapter S corporations.
True
a
False
b
79. The prison inmate job tax credit rate
is 10% of wages paid to each qualified inmate.
True
a
False
b
80. A corporation is not permitted to dissolve
until it obtains a clearance certificate from the franchise tax board.
True
a
False
b
81. Interest on municipal bonds is not
included in gross income for franchise tax purposes.
True
a
False
b
82. Non-profit homeowners associations
are usually tax exempt.
True
a
False
b
83. In the Hunt-Wesson case, the U.S. Supreme
Court struck down California's law regarding stock options.
True
a
False
b
84. Bribes and kickbacks, even if illegal,
are still tax deductible.
True
a
False
b
85. A business may deduct a reasonable
estimated amount for inventory shrinkage at year-end.
True
a
False
b
86. California follows federal law in the
computation of gain or loss from involuntary conversions.
True
a
False
b
87. The "gas guzzler" tax can
be an adjustment to basis under California law.
True
a
False
b
88. "Commercial domicile" is
the principal place from which the trade or business of a taxpayer
is managed.
True
a
False
b
89. The standard apportionment formula
is based strictly on sales.
True
a
False
b
90. The Joyce rule applies to tax years
beginning after April 21, 1999.
True
a
False
b
91. A taxpayer must be given 30 days notice
before a tax lien is filed.
True
a
False
b
92. Special taxes by cities and counties
require approval by a two-thirds majority.
True
a
False
b
93. The sale of an entire business is usually
not subject to sales tax.
True
a
False
b
94. Upon the termination of a business,
the owners and managers may have personal liability for unpaid sales
taxes.
True
a
False
b
95. Estate tax is due and payable as of
the date of the decedent's death.
True
a
False
b
96. California imposes a generation skipping
transfer tax.
True
a
False
b
97. Property tax is imposed by local governmental
units rather than the state.
True
a
False
b
98. There is no tax on intangible property.
True
a
False
b
99. The California employers tax is imposed
on the first $7,000 paid to each employee.
True
a
False
b
100. Cities and counties may not impose
any tax on the transfer of real property.
