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Chapter 01 - Taxes and Taxing Jurisdictions
7. In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.
True False
1-2
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
8. The U.S. government has jurisdiction to tax individuals who are not U.S. citizens but who are
permanent U.S. residents.
True False
9. A tax with a graduated rate structure must have at least two brackets of tax base.
True False
10. A sales tax is an example of a transaction-based tax.

True False
11. A tax on net income is an example of a transaction-based tax.

True False
12. A sales tax is an example of an activity-based tax.

True False
13. Ad valorem property taxes are the major source of revenue for local governments.
True False
14. Taxes on personal property are more difficult to administer and enforce than taxes on real
property.
True False
15. A state government may levy either a sales tax or a use tax on consumers but not both.
True False
1-3
16. Sellers of retail goods are responsible for collecting sales tax from their customers and
remitting the tax to the state government.
True False
17. Purchasers of consumer goods through the mail are responsible for paying use tax on goods
for which sales tax was not collected by the seller.
True False
18. The majority of state governments raise revenue from both personal and corporate income
taxes.
True False
19. The federal government imposed the first income tax to raise money to fight the War of
1812.
True False
20. The U.S. Constitution gives the federal government the power to impose a tax on income
from whatever source derived.
True False
21. The federal government collects more revenue from the corporate income tax than from the
individual income tax.
True False
22. The federal government does not levy property taxes or a general sales tax.
True False
1-4
23. A business that operates in more than one state is required to pay state income tax only to
the state in which it is incorporated.
True False
24. The potential for conflict among taxing jurisdictions is greatest for businesses operating on
a global scale.
True False
25. Less than half of the state governments depend on gambling as a source of revenue.
True False
26. Businesses that sell over the internet must collect sales tax only from purchasers living in a
state in which the business has a physical presence.
True False
27. The Internal Revenue Code is written by the Internal Revenue Service.
True False
28. Treasury regulations are tax laws written by the Treasury Department.
True False
Multiple Choice Questions
29. Which of the following is not characteristic of a tax?

A. A tax is compulsory.
B. A tax is intended to punish unacceptable behavior.
C. A tax is levied by a government.
D. All of the above are characteristics of a tax.
1-5
30. The state of Virginia charges motorists 50 cents for every trip across a toll bridge over the
James River. This charge is an example of a(n):
A. User's fee
B. Transaction-based tax
C. Activity-based tax
D. Excise tax
31. The city of Mayfield charges individuals convicted of DWI (driving while intoxicated)
$500 for the first conviction and $2,000 for any subsequent conviction. These charges are an
example of a(n):
A. User's fee
D. Government penalty
32. The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr.
Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the
incidence of the property tax increase?
A. Mr. Janey
B. Ms. Lacey
C. Both Mr. Janey and Ms. Lacey
D. Neither Mr. Janey nor Ms. Lacey
33. Acme Inc.'s federal income tax increased by $100,000 this year. As a result, Acme reduced
the annual dividend paid on its common stock by $100,000. Who bears the incidence of the
corporate tax increase?
A. Acme Inc.
B. Acme's customers
C. Acme's employees
D. Acme's shareholders
1-6
34. Acme Inc.'s property taxes increased by $65,000 this year. As a result, Acme increased the
sale prices of its products to generate $65,000 more revenue. Who bears the incidence of the
A. Acme Inc.
B. Acme's customers.
C. Acme's employees.
D. Acme's shareholders.
35. Acme Inc.'s property taxes increased by $19,000 this year. As a result, Acme eliminated
$19,000 from its budget for the employee Christmas party. Who bears the incidence of the
A. Acme Inc.
36. Mr. Bilboa is a citizen of Portugal. Which of the following statements is true?
A. The U.S. government has no jurisdiction to tax Mr. Bilboa because he is not a U.S. citizen.
B. The U.S. government has jurisdiction to tax Mr. Bilboa if he is a permanent resident of the
United States.
C. The U.S. government has jurisdiction to tax Mr. Bilboa if he earns income from a business
he operates in Florida.
D. Both B. and C. are true.
37. Mrs. King is a U.S. citizen who permanently resides in South Africa. Which of the
following statements is true?
A. The U.S. government has jurisdiction to tax Mrs. King.
B. The U.S. government has no jurisdiction to tax Mrs. King because she does not live in the
United States.
C. The U.S. government has no jurisdiction to tax Mrs. King because she does not earn any
income from a source within the United States.
D. Mrs. King can elect whether to pay tax to the United States or to South Africa.
1-7
38. Mrs. Renfru is a Brazilian citizen who permanently resides in Houston, Texas. Which of the
A. The U.S. government has no jurisdiction to tax Mrs. Renfru because she is not a U.S. citizen.
B. The U.S. government has jurisdiction to tax Mrs. Renfru only on income that she earns from
a source within the United States.
C. The U.S. government has jurisdiction to tax Mrs. Renfru.
D. Mrs. Renfru can elect whether to pay tax to the United States or to Brazil.
39. Which of the following statements regarding tax systems is false?

A. A single percentage that applies to the entire tax base is described as a flat rate.
B. When designing a tax, governments try to identify tax bases that taxpayers can easily avoid
or conceal.
C. A tax base is an item, occurrence, transaction, or activity with respect to which a tax is levied.
D. With regard to tax systems, the term revenue refers to the total tax collected by the
government.
40. Which of the following is an example of a transaction-based tax?

A. A tax on net business income
B. An excise tax
C. An estate tax on the transfer of assets at death
D. Both B. and C.
41. Which of the following is an example of an activity-based tax?

A. A tax on business' net income
B. An excise tax
C. A gift tax on the transfer of assets by gift
D. Both A. and C.
1-8
42. Which of the following is an earmarked tax?

A. A tax imposed on the purchase of specific items such as liquor or cigarettes
B. A tax that generates revenues that the government can spend only to build more National
Parks
C. A tax imposed only on individuals who earn more than $1 million annually
D. A tax that generates revenues that the government can spend for any purpose
43. Which of the following characterizes a good tax base?

A. The base can be easily expressed in monetary terms.
B. Taxpayers cannot easily avoid or conceal the base.
C. Taxpayers cannot easily move the base from one jurisdiction to another.
D. All of the above characterize a good tax base.
44. The city of Springvale imposes a net income tax on businesses operating within its
jurisdiction. The tax equals 1% of income up to $100,000 and 1.5% of income in excess of
$100,000. The Springvale Bar and Grill generated $782,000 net income this year. Compute its
city income tax.
A. $10,230
B. $11,230
C. $11,730
D. None of the above
45. Government Q imposes a net income tax on businesses operating within its jurisdiction. The
tax equals 3% of income up to $500,000 and 5% of income in excess of $500,000. Company K
generated $782,000 net income this year. Compute the income tax that Company K owes to Q.
A. $29,100
B. $14,100
C. $39,100
1-9
46. Which of the following taxes is not a significant source of revenue for local governments?
A. Real property tax
B. Personal property tax
C. Employment tax
D. All of the above
47. Which of the following taxes is a significant source of revenue for local governments?
B. Employment tax
C. Income tax
48. Which of the following statements concerning property taxes is false?

A. Property taxes are ad valorem taxes.
B. Property taxes are the primary source of revenue for local governments.
C. Property taxes can be levied on realty or personalty.
D. None of the above is false.
49. A sales tax can best be described as a(n):

A. Consumption tax
B. Income tax
C. Activity tax
D. Ad valorem tax
50. Which of the following statements concerning sales taxes is false?

A. Sales taxes apply to the purchase of most types of consumer goods.
B. Sales taxes apply to the purchase of most types of consumer services.
C. Sales taxes are collected by the seller when the sale is made.
D. Sales taxes imposed on the purchaser of retail items are consumption taxes.
1-10
51. The incidence of a state sales tax levied on the purchase of retail goods is:
A. Borne by the ultimate consumer of the goods.
B. Borne by the seller who must collect and remit the tax.
C. Borne by the manufacturer of the goods.
D. Borne by the government that levies the tax.
52. Mr. Dodd resides in a state with a 6% sales and use tax. He recently traveled to another state
to buy a sailboat and paid that state's 4% sales tax. Which of the following statements is true?
A. Mr. Dodd's use tax liability to his home state equals 2% of the purchase price of the furniture.
B. Mr. Dodd does not owe a use tax to his home state.
C. Mr. Dodd's use tax liability to his home state equals 6% of the purchase price of the furniture.
D. None of the above is true.
53. Mr. Smith resides in a state with a 6% sales and use tax. He recently traveled to another state
to buy furniture and paid that state's 7% sales tax. Which of the following statements is true?
A. Mr. Smith is entitled to a refund of 1% of the purchase price of the furniture.
B. Mr. Smith does not owe a use tax to his home state.
C. Mr. Smith's use tax liability to his home state equals 6% of the purchase price of the furniture.
54. Which of the following statements about sales and use taxes is true?
A. If an individual pays a sales tax on the purchase of an item, she will not have to pay a use tax
on the purchase.
B. An individual must pay both a sales tax and a use tax on the taxable purchase of an item.
C. Many states that impose a sales tax do not impose a complementary use tax.
55. Which of the following taxes is a significant source of revenue for state governments?
A. General sales tax
B. Individual income tax
C. Corporate income tax
D. All of the above
1-11
56. Which of the following is not characteristic of an excise tax?

A. An excise tax is levied on the retail sale of specific goods.
B. Excise tax rates typically are higher than general sales tax rates.
C. Purchasers of luxury items are responsible for paying any excise tax directly to the
government.
D. All of the above are characteristics of an excise tax.
57. What is the major difference between a sales tax and an excise tax?
A. Sales taxes are levied by state governments, while excise taxes are levied only by the federal
government.
B. Sales taxes are imposed on the purchase of a wide variety of items, while excise taxes are
imposed on the purchase of a few specific items.
C. Sales taxes must be collected by the seller, while excise taxes must be paid directly by the
purchaser.
D. Sales taxes are imposed on the purchase of tangible goods, while excise taxes are imposed
on the purchase of services.
58. Which of the following is not an advantage of state conformity to federal corporate income
tax laws?
A. States have control over their corporate income tax revenues.
B. States do not have to enact comprehensive corporate income tax statutes.
C. Conformity eases the compliance burden of corporate taxpayers.
D. All of the above are advantages of state conformity.
59. Which tax raises the most revenue for the federal government?
A. Corporate income tax
C. Excise taxes
D. Transfer taxes
1-12
60. Which of the following federal taxes is earmarked for a specific purpose?
B. Employment taxes
C. Unemployment taxes
D. Both B. and C. are earmarked taxes.
61. Which of the following federal taxes is not earmarked for a specific purpose?
A. Employment taxes
B. Unemployment taxes
C. Transfer taxes
D. All of the above are earmarked taxes.
62. What gives the federal government the right to impose a tax on individual and corporate
income?
A. Internal Revenue Code of 1986
B. Revenue Act of 1913
C. Sixteenth Amendment to the U.S. Constitution
D. Bill of Rights
63. When did the federal income tax become a permanent tax.
A. Immediately after the Revolutionary War
B. During the Civil War
C. In 1913 when the Sixteenth Amendment to the U.S. Constitution was ratified
D. In 1939 when Congress enacted the first Internal Revenue Code
64. Which of the following does not characterize federal transfer taxes?
A. The tax is imposed on the value of wealth transferred by an individual as a gift.
B. The tax is imposed on the value of wealth transferred because of the death of an individual.
C. The tax is imposed on the value of wealth transferred by an individual to charity.
D. All of the above characterize federal transfer taxes.
1-13
A. The tax is imposed on individuals but not on corporations.
B. The tax is based on the value of property transferred by gift or at death.
C. The tax is a transaction tax.
66. Company D, which has its home office in Raleigh, North Carolina, conducts business in the
United States, Canada, and Mexico. Which of the following statements is true?
A. Because Company D must pay income tax to North Carolina, it is not required to pay tax to
any other state.
B. Because Company D must pay income tax to North Carolina, it is not required to pay federal
income tax.
C. Because Company D must pay income tax to the United States, it is not required to pay tax to
Canada or Mexico.
67. SJF Inc., which has its corporate offices in Boise, Idaho, conducts business in Idaho,
Oregon, California, and British Columbia, Canada. Which of the following statements is true?
A. SJF must pay income tax only to Idaho and the United States.
B. SJF may be required to pay income tax to Idaho, Oregon, California, British Columbia, the
United States, and Canada.
C. SJF must pay income tax only to Idaho, Oregon, California, and the United States.
D. SJF may be required to pay income tax to either the United States or to Canada, but not to
both.
68. Which type of tax is not levied by the federal government?

C. Employment taxes
D. General sales tax
1-14
69. Company N operates a mail order business out of its headquarters in Tulsa, Oklahoma. This
year, it mailed $892,000 worth of product to customers residing in Oklahoma and $489,300
worth of product to customers residing in Missouri. Which of the following statements is true?
A. Company N must collect Oklahoma sales tax from its Oklahoma customers and Missouri
sales tax from its Missouri customers.
B. Company N must collect Oklahoma sales tax from both its Oklahoma and Missouri
customers.
C. Company N must collect Oklahoma sales tax from its Oklahoma customers.
D. Company D is not required to collect sales tax on any mail order sales.
70. Which of the following does not contribute to the dynamic nature of the tax law?
A. The political pressure from professional lobbyists
B. Changes in the economic and social climate
C. Changes in revenue needs of the government
D. All of the above contribute to the dynamic nature of the tax law
71. Which of the following statements regarding the political process of creating tax law is
false?
A. The political process contributes to the dynamic nature of the tax law.
B. Special interest groups have little effect on the tax legislative process.
C. When taxpayers device a new tactic for reducing their tax burdens, governments respond by
enacting a new rule to render the tactic ineffective.
D. Changes in political philosophy often reflect shifts in the public attitude about the proper
role of taxes in society.
72. Which of the following is/are not a primary source of authority for the tax law?
A. A revenue ruling published by the Internal Revenue Service
B. Section 162 of the Internal Revenue Code
C. Treasury Reg. §1.351-2
D. All of the above are primary sources of authority
1-15
73. Which of the following statements about the Internal Revenue Code is false?
A. The Internal Revenue Code has not been amended since 1986.
B. The Internal Revenue Code is part of federal statutory law.
C. The Internal Revenue Code consists of numerically organized sections.
D. Only Congress has the authority to amend the Internal Revenue Code.
74. How often does Congress amend the Internal Revenue Code?
A. Rarely (the Internal Revenue Code has not been amended since 1986)
B. Occasionally (perhaps once every decade)
C. Regularly (at least once every five years)
D. Constantly (at least once a year)
75. Which of the following statements about Treasury regulations is false?

A. Treasury regulations are written to interpret and explain the Internal Revenue Code.
B. Treasury regulations are part of the statutory law.
C. A federal court can invalidate a Treasury regulation if the court concludes that the regulation
incorrectly interprets the Internal Revenue Code.
76. Revenue rulings and revenue procedures are written by:

A. The Internal Revenue Service
B. The Department of the Treasury
C. The United States Congress
D. The Supreme Court
77. Which of the following is not considered administrative authority?

A. Treasury regulations
B. Revenue rulings
C. Tax Court decisions
D. All of the above are administrative authorities
1-16
78. A revenue ruling is an example of:

A. Judicial authority
B. Administrative authority
C. Legislative authority
D. Editorial authority
79. Which of the following statements concerning judicial authority is false?

A. Appellate court decisions have more authority than trial court decisions.
B. Supreme Court decisions have more authority than appellate court decisions.
C. Supreme Court decisions are the equivalent of law.
D. None of the above statements is false.
80. Which of the following sources of tax law carries the most authority?
A. Revenue procedure
B. Treasury regulation
C. Supreme Court decision
D. The three sources of tax law have equal authority
81. Which of the following sources of tax law carries the least authority?
A. Revenue ruling
C. Section 736 of the Internal Revenue Code
1-17
Short Answer Questions
82. Ms. Penser resides in the city of Lanock, Tennessee. She owns 100% of the stock of PSW
Inc., which is incorporated under Tennessee law and conducts business in six different local
jurisdictions in Tennessee.
A. How many taxpayers are identified in the above statement of facts?

B. Identify the governments with jurisdiction to tax each of these taxpayers.
83. Forrest Township levies a tax on the assessed value of real property located within the town
limits. The tax equals 1.4% of the value up to $300,000 plus 2% of any value in excess of
$300,000. Mildred Payne owns real estate with a $983,500 assessed value. Compute her
property tax.
84. Richton Company operates its business solely in Jurisdiction H, which levies a 6% sales and
use tax. This year, Richton paid $1,438,000 to purchase tangible property from a dealer located
in Jurisdiction W. This purchase was subject to W's 3.5% sales tax. The property was shipped to
Richton's office in Jurisdiction H for use in its business. Compute Richton's sales or use tax
with respect to this transaction.
1-18
85. Grant Wilson is an employee of Market Enterprises, a corporation operating in state A.

Identify the different types of potential taxes to be paid by both Grant and Market Enterprises
with respect to this employment relationship.
1-19
Chapter 01 Taxes and Taxing Jurisdictions Answer Key
True / False Questions
1. Payment of a tax entitles the payer to a specific good or service from the government.
FALSE
Difficulty: 1 Easy
Learning Objective: 01-01 Define the terms tax; taxpayer; incidence; and jurisdiction
2. A user fee entitles the payer to a specific good or service from the government.
TRUE
Difficulty: 1 Easy
3. A tax is intended to deter or punish unacceptable behavior.

FALSE
Difficulty: 1 Easy
4. A tax is a payment to support the cost of government.

TRUE
Difficulty: 1 Easy
1-20
5. Under U.S. tax law, corporations are entities separate and distinct from their shareholders.
TRUE
Difficulty: 1 Easy
6. The person who pays a tax directly to the government always bears the economic incidence
of the tax.
FALSE
Difficulty: 2 Medium
7. In some cases, the payer of a tax can shift the economic incidence of the tax to a third party.
TRUE
Difficulty: 1 Easy
8. The U.S. government has jurisdiction to tax individuals who are not U.S. citizens but who are
permanent U.S. residents.
TRUE
9. A tax with a graduated rate structure must have at least two brackets of tax base.
TRUE
Learning Objective: 01-02 Express the relationship between tax base; rate; and revenue as a formula.
1-21
10. A sales tax is an example of a transaction-based tax.

TRUE
Difficulty: 1 Easy
11. A tax on net income is an example of a transaction-based tax.

FALSE
Difficulty: 1 Easy
12. A sales tax is an example of an activity-based tax.

FALSE
Difficulty: 1 Easy
13. Ad valorem property taxes are the major source of revenue for local governments.
TRUE
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the taxes levied by local governments; state governments; and the federal government.
14. Taxes on personal property are more difficult to administer and enforce than taxes on real
property.
TRUE
1-22
15. A state government may levy either a sales tax or a use tax on consumers but not both.
FALSE
16. Sellers of retail goods are responsible for collecting sales tax from their customers and
remitting the tax to the state government.
TRUE
Difficulty: 1 Easy
17. Purchasers of consumer goods through the mail are responsible for paying use tax on goods
for which sales tax was not collected by the seller.
TRUE
18. The majority of state governments raise revenue from both personal and corporate income
taxes.
TRUE
19. The federal government imposed the first income tax to raise money to fight the War of
1812.
FALSE
Difficulty: 1 Easy
1-23
20. The U.S. Constitution gives the federal government the power to impose a tax on income
from whatever source derived.
TRUE
21. The federal government collects more revenue from the corporate income tax than from the
individual income tax.
FALSE
22. The federal government does not levy property taxes or a general sales tax.
TRUE
Difficulty: 1 Easy
Learning Objective: 01-04 Explain why different jurisdictions compete for revenues from the same taxpayer.
23. A business that operates in more than one state is required to pay state income tax only to
the state in which it is incorporated.
FALSE
24. The potential for conflict among taxing jurisdictions is greatest for businesses operating on
a global scale.
TRUE
Difficulty: 1 Easy
1-24
25. Less than half of the state governments depend on gambling as a source of revenue.
FALSE
Learning Objective: 01-05 Identify the reasons why governments modify their tax systems.
26. Businesses that sell over the internet must collect sales tax only from purchasers living in a
state in which the business has a physical presence.
TRUE
27. The Internal Revenue Code is written by the Internal Revenue Service.
FALSE
Difficulty: 1 Easy
Learning Objective: 01-06 Describe the three primary sources of federal tax law.
28. Treasury regulations are tax laws written by the Treasury Department.
FALSE
Regulations are not laws, which can by enacted only by Congress.
1-25
Multiple Choice Questions
29. Which of the following is not characteristic of a tax?

A. A tax is compulsory.
B. A tax is intended to punish unacceptable behavior.
C. A tax is levied by a government.
D. All of the above are characteristics of a tax.
Difficulty: 1 Easy
30. The state of Virginia charges motorists 50 cents for every trip across a toll bridge over the
James River. This charge is an example of a(n):
A. User's fee
D. Excise tax
Difficulty: 1 Easy
1-26
31. The city of Mayfield charges individuals convicted of DWI (driving while intoxicated)
$500 for the first conviction and $2,000 for any subsequent conviction. These charges are an
example of a(n):
A. User's fee
D. Government penalty
Difficulty: 1 Easy
32. The property tax on a rent house owned by Mr. Janey increased by $1,200 this year. Mr.
Janey increased the monthly rent charged to his tenant, Ms. Lacey, by $45. Who bears the
incidence of the property tax increase?
A. Mr. Janey
B. Ms. Lacey
C. Both Mr. Janey and Ms. Lacey
D. Neither Mr. Janey nor Ms. Lacey
Mr. Janey shifted only $540 ($45 * 12 months) of the $1,200 tax increase to Ms. Lacey by
increasing her rent.
33. Acme Inc.'s federal income tax increased by $100,000 this year. As a result, Acme reduced
the annual dividend paid on its common stock by $100,000. Who bears the incidence of the
A. Acme Inc.
B. Acme's customers
C. Acme's employees
D. Acme's shareholders
Difficulty: 1 Easy
1-27
34. Acme Inc.'s property taxes increased by $65,000 this year. As a result, Acme increased the
sale prices of its products to generate $65,000 more revenue. Who bears the incidence of the
A. Acme Inc.
Difficulty: 1 Easy
35. Acme Inc.'s property taxes increased by $19,000 this year. As a result, Acme eliminated
$19,000 from its budget for the employee Christmas party. Who bears the incidence of the
A. Acme Inc.
Difficulty: 1 Easy
36. Mr. Bilboa is a citizen of Portugal. Which of the following statements is true?
A. The U.S. government has no jurisdiction to tax Mr. Bilboa because he is not a U.S. citizen.
B. The U.S. government has jurisdiction to tax Mr. Bilboa if he is a permanent resident of the
United States.
C. The U.S. government has jurisdiction to tax Mr. Bilboa if he earns income from a business
he operates in Florida.
D. Both B. and C. are true.
1-28
37. Mrs. King is a U.S. citizen who permanently resides in South Africa. Which of the
A. The U.S. government has jurisdiction to tax Mrs. King.
B. The U.S. government has no jurisdiction to tax Mrs. King because she does not live in the
United States.
C. The U.S. government has no jurisdiction to tax Mrs. King because she does not earn any
income from a source within the United States.
D. Mrs. King can elect whether to pay tax to the United States or to South Africa.
38. Mrs. Renfru is a Brazilian citizen who permanently resides in Houston, Texas. Which of the
A. The U.S. government has no jurisdiction to tax Mrs. Renfru because she is not a U.S. citizen.
B. The U.S. government has jurisdiction to tax Mrs. Renfru only on income that she earns from
a source within the United States.
C. The U.S. government has jurisdiction to tax Mrs. Renfru.
D. Mrs. Renfru can elect whether to pay tax to the United States or to Brazil.
39. Which of the following statements regarding tax systems is false?

A. A single percentage that applies to the entire tax base is described as a flat rate.
B. When designing a tax, governments try to identify tax bases that taxpayers can easily avoid
or conceal.
C. A tax base is an item, occurrence, transaction, or activity with respect to which a tax is levied.
D. With regard to tax systems, the term revenue refers to the total tax collected by the
government.
1-29
40. Which of the following is an example of a transaction-based tax?

A. A tax on net business income
B. An excise tax
C. An estate tax on the transfer of assets at death
D. Both B. and C.
Difficulty: 1 Easy
41. Which of the following is an example of an activity-based tax?

A. A tax on business' net income
B. An excise tax
C. A gift tax on the transfer of assets by gift
D. Both A. and C.
42. Which of the following is an earmarked tax?

A. A tax imposed on the purchase of specific items such as liquor or cigarettes
B. A tax that generates revenues that the government can spend only to build more National
Parks
C. A tax imposed only on individuals who earn more than $1 million annually
D. A tax that generates revenues that the government can spend for any purpose
43. Which of the following characterizes a good tax base?

A. The base can be easily expressed in monetary terms.
B. Taxpayers cannot easily avoid or conceal the base.
C. Taxpayers cannot easily move the base from one jurisdiction to another.
D. All of the above characterize a good tax base.
Difficulty: 1 Easy
1-30
44. The city of Springvale imposes a net income tax on businesses operating within its
jurisdiction. The tax equals 1% of income up to $100,000 and 1.5% of income in excess of
$100,000. The Springvale Bar and Grill generated $782,000 net income this year. Compute its
city income tax.
A. $10,230
B. $11,230
C. $11,730
(1% * $100,000) + (1.5% * $682,000) = $11,230
45. Government Q imposes a net income tax on businesses operating within its jurisdiction. The
tax equals 3% of income up to $500,000 and 5% of income in excess of $500,000. Company K
generated $782,000 net income this year. Compute the income tax that Company K owes to Q.
A. $29,100
B. $14,100
C. $39,100
(3% * $500,000) + (5% * $282,000) = $29,100
46. Which of the following taxes is not a significant source of revenue for local governments?
B. Personal property tax
C. Employment tax
D. All of the above
1-31
47. Which of the following taxes is a significant source of revenue for local governments?
B. Employment tax
C. Income tax
48. Which of the following statements concerning property taxes is false?

A. Property taxes are ad valorem taxes.
B. Property taxes are the primary source of revenue for local governments.
C. Property taxes can be levied on realty or personalty.
49. A sales tax can best be described as a(n):

A. Consumption tax
B. Income tax
C. Activity tax
D. Ad valorem tax
Difficulty: 1 Easy
1-32
50. Which of the following statements concerning sales taxes is false?

A. Sales taxes apply to the purchase of most types of consumer goods.
B. Sales taxes apply to the purchase of most types of consumer services.
C. Sales taxes are collected by the seller when the sale is made.
D. Sales taxes imposed on the purchaser of retail items are consumption taxes.
Sales taxes typically apply to only a few select consumer services.
51. The incidence of a state sales tax levied on the purchase of retail goods is:
A. Borne by the ultimate consumer of the goods.
B. Borne by the seller who must collect and remit the tax.
C. Borne by the manufacturer of the goods.
D. Borne by the government that levies the tax.
52. Mr. Dodd resides in a state with a 6% sales and use tax. He recently traveled to another state
to buy a sailboat and paid that state's 4% sales tax. Which of the following statements is true?
A. Mr. Dodd's use tax liability to his home state equals 2% of the purchase price of the furniture.
B. Mr. Dodd does not owe a use tax to his home state.
C. Mr. Dodd's use tax liability to his home state equals 6% of the purchase price of the furniture.
1-33
53. Mr. Smith resides in a state with a 6% sales and use tax. He recently traveled to another state
to buy furniture and paid that state's 7% sales tax. Which of the following statements is true?
A. Mr. Smith is entitled to a refund of 1% of the purchase price of the sailboat.
B. Mr. Smith does not owe a use tax to his home state.
C. Mr. Smith's use tax liability to his home state equals 6% of the purchase price of the sailboat.
54. Which of the following statements about sales and use taxes is true?
A. If an individual pays a sales tax on the purchase of an item, she will not have to pay a use tax
on the purchase.
B. An individual must pay both a sales tax and a use tax on the taxable purchase of an item.
C. Many states that impose a sales tax do not impose a complementary use tax.
Difficulty: 3 Hard
55. Which of the following taxes is a significant source of revenue for state governments?
A. General sales tax
C. Corporate income tax
D. All of the above
1-34
56. Which of the following is not characteristic of an excise tax?

A. An excise tax is levied on the retail sale of specific goods.
B. Excise tax rates typically are higher than general sales tax rates.
C. Purchasers of luxury items are responsible for paying any excise tax directly to the
government.
D. All of the above are characteristics of an excise tax.
Sellers (not purchasers) are responsible for collecting and remitting excise taxes to the
government.
57. What is the major difference between a sales tax and an excise tax?
A. Sales taxes are levied by state governments, while excise taxes are levied only by the federal
government.
B. Sales taxes are imposed on the purchase of a wide variety of items, while excise taxes are
imposed on the purchase of a few specific items.
C. Sales taxes must be collected by the seller, while excise taxes must be paid directly by the
purchaser.
D. Sales taxes are imposed on the purchase of tangible goods, while excise taxes are imposed
on the purchase of services.
58. Which of the following is not an advantage of state conformity to federal corporate income
tax laws?
A. States have control over their corporate income tax revenues.
B. States do not have to enact comprehensive corporate income tax statutes.
C. Conformity eases the compliance burden of corporate taxpayers.
D. All of the above are advantages of state conformity.
1-35
59. Which tax raises the most revenue for the federal government?
C. Excise taxes
D. Transfer taxes
Refer to Exhibit 1.1
Difficulty: 3 Hard
60. Which of the following federal taxes is earmarked for a specific purpose?
B. Employment taxes
C. Unemployment taxes
D. Both B. and C. are earmarked taxes.
Employment taxes fund the Social Security and Medicare programs, and unemployment taxes
fund the national unemployment insurance system.
Difficulty: 3 Hard
61. Which of the following federal taxes is not earmarked for a specific purpose?
A. Employment taxes
B. Unemployment taxes
C. Transfer taxes
D. All of the above are earmarked taxes.
Employment taxes fund the Social Security and Medicare programs, and unemployment taxes
fund the national unemployment insurance system. Transfer tax revenues are a source of
general revenue.
Difficulty: 3 Hard
1-36
62. What gives the federal government the right to impose a tax on individual and corporate
income?
A. Internal Revenue Code of 1986
B. Revenue Act of 1913
C. Sixteenth Amendment to the U.S. Constitution
D. Bill of Rights
63. When did the federal income tax become a permanent tax?
A. Immediately after the Revolutionary War
B. During the Civil War
C. In 1913 when the Sixteenth Amendment to the U.S. Constitution was ratified
D. In 1939 when Congress enacted the first Internal Revenue Code
A. The tax is imposed on the value of wealth transferred by an individual as a gift.
B. The tax is imposed on the value of wealth transferred because of the death of an individual.
C. The tax is imposed on the value of wealth transferred by an individual to charity.
A. The tax is imposed on individuals but not on corporations.
B. The tax is based on the value of property transferred by gift or at death.
C. The tax is a transaction tax.
Difficulty: 3 Hard
1-37
66. Company D, which has its home office in Raleigh, North Carolina, conducts business in the
United States, Canada, and Mexico. Which of the following statements is true?
A. Because Company D must pay income tax to North Carolina, it is not required to pay tax to
any other state.
B. Because Company D must pay income tax to North Carolina, it is not required to pay federal
income tax.
C. Because Company D must pay income tax to the United States, it is not required to pay tax to
Canada or Mexico.
Company D may have to pay income tax to multiple state and local governments, as well as to
the United States, Canada, and Mexico.
Difficulty: 3 Hard
67. SJF Inc., which has its corporate offices in Boise, Idaho, conducts business in Idaho,
Oregon, California, and British Columbia, Canada. Which of the following statements is true?
A. SJF must pay income tax only to Idaho and the United States.
B. SJF may be required to pay income tax to Idaho, Oregon, California, British Columbia, the
United States, and Canada.
C. SJF must pay income tax only to Idaho, Oregon, California, and the United States.
D. SJF may be required to pay income tax to either the United States or to Canada, but not to
both.
SJF may have to pay income tax to every taxing jurisdiction within which it conducts business.
Difficulty: 3 Hard
68. Which type of tax is not levied by the federal government?

C. Employment taxes
D. General sales tax
Difficulty: 1 Easy
1-38
69. Company N operates a mail order business out of its headquarters in Tulsa, Oklahoma. This
year, it mailed $892,000 worth of product to customers residing in Oklahoma and $489,300
worth of product to customers residing in Missouri. Which of the following statements is true?
A. Company N must collect Oklahoma sales tax from its Oklahoma customers and Missouri
sales tax from its Missouri customers.
B. Company N must collect Oklahoma sales tax from both its Oklahoma and Missouri
customers.
C. Company N must collect Oklahoma sales tax from its Oklahoma customers.
D. Company D is not required to collect sales tax on any mail order sales.
Company N has no physical presence in Missouri so it is not required to collect Missouri sales
tax.
Difficulty: 3 Hard
70. Which of the following does not contribute to the dynamic nature of the tax law?
A. The political pressure from professional lobbyists
B. Changes in the economic and social climate
C. Changes in revenue needs of the government
D. All of the above contribute to the dynamic nature of the tax law
Difficulty: 1 Easy
71. Which of the following statements regarding the political process of creating tax law is
false?
A. The political process contributes to the dynamic nature of the tax law.
B. Special interest groups have little effect on the tax legislative process.
C. When taxpayers device a new tactic for reducing their tax burdens, governments respond by
enacting a new rule to render the tactic ineffective.
D. Changes in political philosophy often reflect shifts in the public attitude about the proper
role of taxes in society.
1-39
72. Which of the following is/are not a primary source of authority for the tax law?
A. A revenue ruling published by the Internal Revenue Service
B. Section 162 of the Internal Revenue Code
C. Treasury Reg. §1.351-2
D. All of the above are primary sources of authority
73. Which of the following statements about the Internal Revenue Code is false?
A. The Internal Revenue Code has not been amended since 1986.
B. The Internal Revenue Code is part of federal statutory law.
C. The Internal Revenue Code consists of numerically organized sections.
D. Only Congress has the authority to amend the Internal Revenue Code.
Difficulty: 1 Easy
74. How often does Congress amend the Internal Revenue Code?
A. Rarely (the Internal Revenue Code has not been amended since 1986)
B. Occasionally (perhaps once every decade)
C. Regularly (at least once every five years)
D. Constantly (at least once a year)
75. Which of the following statements about Treasury regulations is false?

A. Treasury regulations are written to interpret and explain the Internal Revenue Code.
B. Treasury regulations are part of the statutory law.
C. A federal court can invalidate a Treasury regulation if the court concludes that the regulation
incorrectly interprets the Internal Revenue Code.
1-40
76. Revenue rulings and revenue procedures are written by:

A. The Internal Revenue Service
B. The Department of the Treasury
C. The United States Congress
D. The Supreme Court
Difficulty: 1 Easy
77. Which of the following is not considered administrative authority?

A. Treasury regulations
B. Revenue rulings
C. Tax Court decisions
D. All of the above are administrative authorities
Difficulty: 1 Easy
78. A revenue ruling is an example of:

A. Judicial authority
B. Administrative authority
C. Legislative authority
D. Editorial authority
Difficulty: 1 Easy
79. Which of the following statements concerning judicial authority is false?

A. Appellate court decisions have more authority than trial court decisions.
B. Supreme Court decisions have more authority than appellate court decisions.
C. Supreme Court decisions are the equivalent of law.
D. None of the above statements is false.
1-41
80. Which of the following sources of tax law carries the most authority?
A. Revenue procedure
C. Supreme Court decision
81. Which of the following sources of tax law carries the least authority?
A. Revenue ruling
C. Section 736 of the Internal Revenue Code
Short Answer Questions
82. Ms. Penser resides in the city of Lanock, Tennessee. She owns 100% of the stock of PSW
Inc., which is incorporated under Tennessee law and conducts business in six different local
jurisdictions in Tennessee.
A. How many taxpayers are identified in the above statement of facts?

B. Identify the governments with jurisdiction to tax each of these taxpayers.
A. Ms. Penser is an individual taxpayer, and PSW Inc. is a corporate taxpayer. The city of
Lanock, the state of Tennessee, and the United States have jurisdiction to tax Ms. Penser.
B. The six local jurisdictions, the state of Tennessee, and the United States have jurisdiction to
tax PSW Inc.
Difficulty: 1 Easy
1-42
83. Forrest Township levies a tax on the assessed value of real property located within the town
limits. The tax equals 1.4% of the value up to $300,000 plus 2% of any value in excess of
$300,000. Mildred Payne owns real estate with a $983,500 assessed value. Compute her
property tax.
Mildred's property tax is $17,870 ($4,200 [$300,000 * 1.4%] + $13,670 [$683,500 * 2%]).
84. Richton Company operates its business solely in Jurisdiction H, which levies a 6% sales and
use tax. This year, Richton paid $1,438,000 to purchase tangible property from a dealer located
in Jurisdiction W. This purchase was subject to W's 3.5% sales tax. The property was shipped to
Richton's office in Jurisdiction H for use in its business. Compute Richton's sales or use tax
with respect to this transaction.
Richton must pay $50,330 sales tax to Jurisdiction W ($1,438,000 * 3.5%), and $35,950 use tax
to Jurisdiction H ($86,280 [$1,438,000 * 6%] - $50,330).
85. Grant Wilson is an employee of Market Enterprises, a corporation operating in state A.

Identify the different types of potential taxes to be paid by both Grant and Market Enterprises
with respect to this employment relationship.
Grant is potentially liable for federal, state, and local income taxes. He will also be liable for
federal employment taxes. Market Enterprises will pay federal employment taxes and federal
and state unemployment taxes based on compensation paid to Grant.
1-43
Another random document with
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"You are nothing more than a traitor!" cried Collot; "it is our indictment
you are drawing up there, I suppose?"
"Yes, traitor! threefold traitor!" exclaimed Elie Lacoste. "Traitor and

perjurer, you form with Robespierre and Couthon a triumvirate of calumny,
falsehood, and betrayal."
Saint-Just, without losing self-possession a moment, stopped in his

writing, and coldly offered to read them his speech.
Barère disdainfully refused to listen.
"We fear neither you nor your accomplices! You are but a child,
Couthon a miserable cripple, and as to Robespierre..."
At this moment an usher brought in a letter to Barère. He looked uneasy

after he had read it, and signed to his colleagues to follow, leaving Saint-
Just free to continue his work. In the lobby Barère told them it was a letter
from Lecointre announcing the approaching attack upon the Committee by
the troops of the Commune, and offering the battalion of his section for
their defence.
"It is exactly as I told you!" cried Elie Lacoste. "The leaders of the
Commune must be instantly arrested, and with them Robespierre and his
two accomplices!"
"Commencing with Saint-Just and his speech," said Collot.
"Robespierre was here just now," observed Billaud-Varennes, who had

followed his colleagues out of the room; "he wanted to know what we had
done with the prisoner from La Force. We told him we had not to render
account to him, whereupon he went away in a rage, crying out, 'You want
war? War you shall have then!' We have been warned by the Incorruptible
himself, you see!"
"Yes, but we shall crush him through his Englishman! We have

witnesses enough now!"
"Nay, unhappily we have not!" replied Billaud.
"What! we have no witnesses?" exclaimed Barère in surprise. "What do

you mean? ... Has not Coulongeon...?"
"Coulongeon arrived too late at La Bourbe Lebas had just taken them
off, by Robespierre's orders—no one knows whither."
"Oh! the villain! he suspected something, then, and abducted them to

suppress their evidence; but we have at any rate the young man from La
Force."
"He is upstairs, but he knows nothing."
"He lies, he is a traitor!"
"No, he seemed quite sincere, and he execrates Robespierre; but I shall

question him again to-morrow."
"And meanwhile we must resort to stratagem," remarked Barère.
They discussed and debated the question, and all came to the conclusion
that Barère was right. Their safety lay in stratagem. After all, there was no
immediate peril. Robespierre was not fond of violent measures, he would
not break the bounds of the law unless driven to it. It was out of sheer
vexation that he had thrown that challenge in Billaud-Varennes' face; and
after all, since Saint-Just had again assured them of the Incorruptible's pure
intentions, it would be perhaps prudent to dissemble and to disarm the
triumvirate by simulating confidence.
On the whole the members of the Committee were undecided, hesitating

between two alternatives, one as dangerous as the other. Either they must
openly attack Robespierre and overthrow him, and thus add to the already
unbounded power of the Committee, which would then more easily crush
the Convention; or they must leave the power in Robespierre's hands, who,
when once master, would lose no time in annihilating them.
The members returned to the Committee-room where Saint-Just was
still writing. They spoke as if they had altered their mind on thinking things
over. They regretted their hasty words, for after all the patriotism of
Robespierre and his friends had stood a long test. They spoke of precautions
to be taken in case of an unexpected attack, for warnings had reached them
from every quarter. All this was discussed aloud before Saint-Just,
ostensibly to show their complete confidence in him.
Saint-Just, to all appearance the dupe of their hypocrisy, assured them

they were unnecessarily alarmed. If the Jacobins and the Commune had
formed any projects against the Committee, he would have heard of it.
There was certainly considerable excitement in the streets among the people
whose anger had been aroused at the calumnies to which Robespierre had
been subject. But the Incorruptible would soon calm them down. As far as
he, Saint-Just, was concerned, he was ready to forget the somewhat hasty
words which one of his colleagues had addressed to him in the heat of the
moment.
Collot d'Herbois upon a sign from Barère feigned to regret his hasty
speech, which was, of course, he said, the outcome of excitement. It was so
easy in these times of anger and enmity to be carried away by the fever of
the moment. The dissensions of the Committee were making them the
laughing-stock of their enemies.
Saint-Just, cold and impassive as before, quietly assented, and

meanwhile continued to draft his speech, and when he had finished put it in
his pocket, and looked up at the clock. It was five in morning.
"At ten, the speech will be copied, and I shall read it to you before the
sitting, so that there may be no unpleasantness," said Saint-Just, rising to
go.
Taking his hat and stick, he moved off, the others, to all appearance
reassured, pretending to do likewise; but Saint-Just had no sooner
disappeared than they returned to the Committee-room. It was agreed to
send for the three leaders suspected of assisting Robespierre in the
insurrection: Hauriot, the Commander of the troops; Payan, the Commune
agent; and Fleuriot-Lescot, Mayor of Paris. The ushers returned with the
two last named, but Hauriot was not to be found. For the space of four
hours they retained Payan and Fleuriot-Lescot, smoking, drinking, eating,
talking, and discussing, in the sultry and oppressive heat which heralded the
near approach of a storm. They thus held them in check for the time being,
overwhelming them meanwhile with questions, to which they replied in
terms that tended to calm the anxiety of the Committee.
During this time the Parisian populace, who had not slept either, had
entered the Convention, the assembly-hall of which, situated also in the
palace of the Tuileries, within ear-shot of the Committee, had been filling
since five o'clock that morning, though the sitting was not to commence
until noon.
Every moment messengers arrived at the Committee-room, ushers out

of breath bringing news, messages, and reports in an endless succession,
which increased as the hours advanced. Payan and Fleuriot-Lescot had just
left, after completely reassuring the Committee. It was now half-past ten,
and the sitting was opened. Saint-Just did not put in an appearance, but the
thump of crutches was heard in the corridor, announcing the arrival of
Couthon, the cripple.
"Where is Saint-Just?"
"He is coming!"
For one hour Couthon kept the Committee in suspense, entertaining

them with Saint-Just's favourite theme, Robespierre's single-minded
patriotism, but still no Saint-Just appeared. The Committee began to feel
annoyed, and soon Carnot, who suspected treachery, spoke out boldly. It
was nothing less, he said, than a preconcerted plan between Couthon, Saint-
Just, and Robespierre.
Couthon protested.
"You do wrong to speak ill of the patriot Robespierre! You are basely
calumniating a friend of your childhood!"
"If I am base, you are a traitor!" retorted Carnot, beside himself with
rage.
But Couthon, anticipating a storm, took up his crutches and stumped

off, protesting as he went. Sinister sounds now reached the Committee.
They had been betrayed! Saint-Just was going to denounce them from the
tribune! The document he had been drafting before them, there on that
table, was nothing more or less than the indictment of the Committee!
Barère had just received trustworthy information to that effect. Robespierre
had drawn up a list of eighteen names of those destined for the scaffold. A
deputy entered and asked for Billaud-Varennes. He was told that Billaud
had just gone out, but would return shortly.
"Ah! Here is Fouché!" some one exclaimed.
It was in truth Fouché, the deputy, who now entered. He was beset with
questions. Yes! they were not mistaken, he told them. Robespierre was now
going to throw off the mask, and denounce some of his colleagues. "And I
am sure he has not forgotten me," added Fouché, ironically.
He was immediately surrounded by eager questioners. The names? Did

he know the names? they asked anxiously. Fouché did not know; but
everybody was threatened, and each must look after himself; the sitting
would soon begin.
All turned their eyes anxiously to the clock. It was not yet noon; they
had still twelve minutes! Now another deputy came in, breathless with the
news that Robespierre had just entered the Hall of the Convention, with his
brother Augustin, Couthon, Saint-Just, Lebas, and all his followers. The
galleries, crowded to excess, had received the Incorruptible with loud
cheers.
"Hark, the rabble are applauding; he has hired his usual claque," said
one.
"That's true," another answered. "Since five this morning the

Robespierrists, male and female, have taken possession of the galleries,
yelling, feasting, and drinking."
"They are already drunk."
"Well! Let us go and offer our heads to the drunkards!" exclaimed

Fouché.
But just then a door on the right opened, and Billaud-Varennes entered.
Every one paused.
"Here is Billaud at last."
Billaud was looking anxious, and wiping his brow, worn out with the
heat, he asked for a glass of beer. They eagerly questioned him.
"Was it true, then? They would have to fight?"
"Yes! fight to the death. They ought to have listened to him. Robespierre
had told him plainly enough that there would be war. And now that they
could not prove the plot...."
"What plot?" asked Fouché.
"Ah, yes! It's true; you don't know...."
Billaud made a sign to shut the doors, as Robespierre had spies in all the
corridors. The doors securely closed, Billaud-Varennes again told the story
of the Englishman. Fouché listened with curiosity. Other members, Vadier,
Amar, Voullaud, who had just entered, also followed Billaud's story with
keen interest, while those who already knew of the plot, came and went,
deep in discussion, waiting for Billaud to finish, to give their opinion.
Billaud-Varennes now produced the order of release for the two women,
signed by Robespierre, and brought from the prison of La Bourbe by
Coulongeon.
"There can be no doubt. We have in this quite enough to ruin him," said
Fouché; "but what about that young man from La Force?"
"I questioned him again closely just now in the next room. He persists
in his first statement, which appears to me quite genuine—as genuine as is
his rage against Robespierre, whom he regrets, he says, not to have stabbed
at the Fête of the Supreme Being."
"Ah! if he had! what a riddance!" was the cry with which one and all
greeted Billaud's last words.
"True; but he has not done it," observed Fouché drily. "As to the plot, it
has escaped our grasp."
"Not so," some one remarked; "his treason is evident."
A warm discussion ensued. The treachery was obvious to the

Committee, but it would not be so in the eyes of the public. It must be
proved. And where was the Englishman? Where were the women? To
accuse Robespierre thus, without sufficient proof, was sheer folly. The only
witness available, the agent Coulongeon, was in the pay of the Committee.
Robespierre would make a speech on it, call it a concocted plan, and
annihilate his accusers with an oratorical flourish.
"Nothing truer!" remarked another deputy.
"He has only to open his mouth and every one trembles."
"Very well; let us gag him," said Fouché. "It's the only means of putting
an end to it all."
They looked at him, not quite catching his meaning. Fouché explained
his idea. They had but to drown Robespierre's voice at the sitting by their
clamour. They had but to howl, scream, vociferate; the people in the
galleries would protest noisily, and their outcry would add to the tumult.
Robespierre would strain his voice in vain to be heard above the uproar, and
then fall back exhausted and vanquished.
"That's it," they cried unanimously.
Billaud also thought this an excellent idea, and at once began to arrange
for letting all their friends know as soon as possible, for Robespierre must
be prevented from uttering a single audible word. Every one approved. Just
then a door opened.
"Be quick! Saint-Just is ascending the tribune!" called a voice.
"Very well. We may as well commence with him."
And they one and all made for the doors in an indescribable disorder.
"Now for it," cried Billaud, laying his glass down on the sideboard.
But meanwhile Fouché signed to Vadier, Amar, and Voullaud to remain.

They looked at him in surprise. Fouché waited for the noise to subside, then
assuring himself that no one could overhear him, he confided his fears to
them. It was not everything to drown Robespierre's voice. Even arrested,
condemned, and on the death-tumbril, his hands bound, Robespierre would
still be dangerous; a sudden rush and riot could deliver him, and crush them
all! Then lowering his voice, he continued—
"The young madman of whom Billaud spoke just now...."
"Well?"
"Where is he?"
Amar pointed to a door on the left.
"Let him come in!" said Fouché; "I will speak to him in the name of the
Committee."
They did not yet quite grasp his meaning, but Voullaud went all the
same and opened the door.
"Hush!" said Fouché, "here is the young man!"
Olivier entered, followed by a gendarme, who, on seeing Fouché and

the other members, stopped on the threshold. Olivier looked at them
indifferently, expecting to be again cross-examined about the Englishman.
Fouché had taken his hat and put it on, as if going out.
"Young man, you were the first to charge the despot, whom we are
about to fight, with his crimes! This is sufficient to recommend you to the
indulgence of the Committee."
As Olivier advanced in astonishment, he continued—
"You may go if you like!"
Fouché turned to the gendarme—
"The citoyen is free!"
The gendarme retired.
Vadier now understood Fouché's idea. Taking up his hat also, he

remarked—
"And if our enemy is victorious, take care not to fall again into his
clutches!"
Olivier who was preparing to go, stopped suddenly. Unhappily, he said,

he had not only himself to tremble for. His mother and fiancée were in
prison and Robespierre would revenge himself on them.
"Most probably!" replied Fouché.
"Then the Committee ought to release them also, and with even more
reason!"
Fouché shrugged his shoulders regretfully.
It had been the intention of the Committee, but the two prisoners were
beyond their reach.
"How?" asked Olivier anxiously.
Simply because they were no longer at the prison of La Bourbe.
Olivier gasped—
"Condemned?"
"Not yet! But Lebas had taken them away with an order from
Robespierre."
Here Fouché, picking up the order left on the table by Billaud-Varennes,

showed it to Olivier, who read it in horrified amazement.
"Where are they then," he cried.
"At the Conciergerie, where they would be judged within twenty-four

hours."
"The wretch! the wretch!"
He implored them that they might be released. The Committee were all-
powerful!—They, powerful, indeed? They looked at him pityingly. He
believed that? What simplicity! How could they release the two women
when they were on the point of being sacrificed themselves? They would
have difficulty enough to save their own heads!
"To-morrow," continued Fouché, "we shall most likely be with your

mother, at the foot of the scaffold."
Olivier looked at them in terror. Was it possible? Was there no one that
could be found to kill this dangerous wild beast?
Fouché, who had consulted his colleagues in a rapid glance, now felt the
moment ripe.
"Assassinate him, you mean?" he asked.
Olivier lost all self-control. Is a mad dog assassinated? He is killed,

that's all! What did it matter if the one who did it were torn to pieces; he
would have had his revenge, and would save further victims.
"Certainly," said Fouché, "and if Robespierre is victorious, it is the only

chance of saving your mother."
"But don't rely on that!" Vadier remarked.
Amar went even further.
"Patriots like Brutus are not often found!" he said.
But Olivier cried out in his fury that only one was wanted, and then
looked about for the door.
"Which is the way out?"
Vadier pointed to the exit.
"Thank you, citoyens! ... Adieu! au revoir!"
The four men silently watched him disappear, and then looked at each
other.... Would he do it? It was not impossible!
"Meanwhile, let us go and howl!" suggested Fouché.
And they rushed into the Convention-room.
CHAPTER XIII
A BROKEN IDOL
Saint-Just is in the tribune. Collot d'Herbois occupies the presidential

chair, Collot who, at two in the morning, suspecting Saint-Just's treachery,
had openly charged him with it. War is in the air, and every member is at his
post.
Fouché looks round for Robespierre as he crosses to his seat. There he

is; in the semicircle before the bust of Brutus, at the foot of the tribune
which he seems to guard like a vigilant sentinel.
"He is dressed as he was at the Fête of the Supreme Being," whispers

Fouché ironically to his neighbour.
Yes, the Incorruptible has on his sky-blue coat, white-silk embroidered

waistcoat, and nankeen knee-breeches buttoned over white stockings, nor
has he omitted the powder and the curls. What a strange figure, with his
dapper daintiness, his old-fashioned attire, in that seething furnace of fifteen
hundred people, actors and spectators, so closely packed, and, most of them
with bared breasts, suffocating in the awful heat which oppresses them! The
sans-culottes up in the gallery have even taken off their traditional red
nightcaps, which they hang on the handles of their sword-sticks like
bloodstained trophies.
It is as they expected. Since five the hall has been taken possession of
by Robespierrists. All the worst scum of Paris has gathered there; all the
bloodhounds of the Revolution, all the riff-raff who accompany the death-
tumbrils to the scaffold to the song of the Carmagnole; fish-wives and
rowdies, recruited and hired at twenty-four sous apiece to drown with their
vociferations every hostile attempt made against the idol of the Commune.
This brutish mob, reeking of sausages, pressed meat, gingerbread and

beer, eating and drinking, poison the atmosphere of the Hall.
Robespierre's arrival at twelve o'clock is hailed by repeated rounds of

loud applause, which he acknowledges with a gracious bow, proud and
smiling. Turning to Lebas who accompanies him, he remarks, "Did I not tell
you it would be a success?"
So certain is he of victory that before starting he had set the Duplays

quite at ease as to the issue of the struggle. "Believe me," he had said, "the
greater part of the Convention are unbiassed."
But suddenly, at the commencement of the sitting, when Saint-Just

appears in the tribune, a counter movement makes itself felt in the
assembly. Robespierre realising the importance of at once preventing any
hostile demonstration, advances to the foot of the tribune, determined to
daunt his opponents by a bold front. Saint-Just at once renews the
accusation brought against the Committee by the Incorruptible the day
before, accentuating it without mentioning names.
It is now that the anti-Robespierrist plot, admirably planned, begins to

work.
Tallien, one of the conspirators, breaks in upon Saint-Just violently.
"Enough of these vague accusations!" he cries. "The names! Let us have

the names!"
Saint-Just, encouraged by a look from Robespierre, simply shrugs his

shoulders, and continues. But his voice is immediately drowned in a
thundering clamour, and in spite of the vehement protestations of
Robespierre, he is unable to finish his speech. The anti-Robespierrist cabal
are playing their part well. They simply roar.
Billaud-Varennes demands a hearing. He is already in the tribune,

greeted by sustained applause.
Robespierre, growing excited, protests and persists in speaking, but his

voice is drowned in cries of "Silence! Silence! Let Billaud-Varennes
speak!" Collot d'Herbois rings the president's bell, and adds to the noise
under the pretext of repressing it.
"Let Billaud-Varennes speak! Let Billaud-Varennes speak!"
But Robespierre continues to protest—
"Don't listen to that man! His words are but poisonous drivel!"
Immediately loud cries are heard—
"Order! Order! Robespierre is not in the tribune! Billaud-Varennes is in

the tribune! Silence! Silence!"
And Robespierre, with a shrug of contempt, returns to his place.

Silence being gradually restored, Billaud-Varennes begins to speak.
"I was at the Jacobins' yesterday; the room was crowded with men
posted there to insult the National representatives, and to calumniate the
Committee of Public Safety which devotes its days and nights to kneading
bread for you, to forging arms and raising armies for you, to sending them
forth to victory!"
A voice is heard in approval, and fresh applause breaks out; but the gaze
of the orator is fixed on that part of the assembly called the Mountain. He
seems to recognise some one, at whom he points with lifted arm.
"I see yonder, on the Mountain, one of the wretches who insulted us
yesterday. There he stands!"
This is the signal for renewed uproar. Several members spring up and
turn round towards the person indicated.
"Yes, yes, behold him!" cries Billaud.
The agitation increases. Cries of "To the door with him! Turn him out!"
are heard. The man pleads innocence, and tries to weather the storm, but
seeing the majority against him escapes as best he can, mixes with the
crowd and disappears. Silence is with difficulty restored among the
infuriated members.
The orator continues, throwing violent and insidious phrases broadcast

among the assembly like lighted fire-brands. His thrusts strike nearer home
now; he accuses Robespierre openly to his face.
"You will shudder when I tell you that the soldiery is under the
unscrupulous control of that man who has the audacity to place at the head
of the section-men and artillery of the city the degraded Hauriot, and that
without consulting you at all, solely according to his own will, for he listens
to no other dictates. He has, he says, deserted the Committees because they
oppressed him. He lies!"
Robespierre rises, his lips quivering at the insult, and attempts to reply
from his place.
"Yes, you lie!" continues Billaud. "You left us because you did not find
among us either partisans, flatterers, or accomplices in your infamous
projects against Liberty. Your sole aim has been to sow dissension, to
disunite us that you might attack us singly and remain in power at the head
of drunkards and debauchees, like that secretary who stole a hundred and
fifty thousand livres, and whom you took under your wing, you, the
Incorruptible, you who make such boast of your strict virtue and integrity!"
Laughter, mixed with some applause is heard, but Robespierre shrugs

his shoulders contemptuously at such vulgar abuse. Fouché, from his bench,
laughs loudly with the rest, and leaning towards his neighbour, whispers—
"Clever tactics! ... Billaud is splendid!"
The speaker, in conclusion, appeals to the patriotism of the assembly,

and implores the members to watch over its safety. If they do not take
energetic measures against this madman, he says, the Convention is lost, for
he only speaks of purifying it that he may send to the scaffold all those who
stand in the way of his personal ambition. It is, he insists, the preservation
of the Convention which is at stake, the safety of the Republic, the salvation
of their country.
"I demand," so runs his peroration, "that the Convention sit permanently
until it has baffled the plans of this new Catiline, whose only aim is to cross
the trench which still separates him from supremacy by filling it with our
heads!"
Thunders of applause greet Billaud-Varennes' words; shouts, cheers, and

waving of hands which continue long after he has left the tribune.
Robespierre now leaves his seat in great agitation, crying—
"It is all false, and I will prove it!"

But his words are again drowned in an uproar of voices, and cries of
"Silence! Silence!"
"I will give the traitor his answer!" exclaims Robespierre, trying to
make himself heard above the tumult which increases at every word he
utters, so that his voice is now completely lost. Some of the members rush
into the semicircle, forming a living rampart round the tribune.
The din is dominated by a new voice from the presidential chair.
"Silence, let no man speak!" it thunders forth.
It is Thuriot, who has just replaced Collot d'Herbois in the chair.
"I demand a hearing!" vociferates the Incorruptible, "and I will be

heard!"
"You shall not!"
"I wish to speak!" cries a deputy, taking at the same time possession of
the tribune.
It is Vadier.
Thuriot rings the president's bell.
"Vadier has speech!"
"Yes, Vadier! Vadier!" members exclaim from all sides.
Robespierre continues to protest, disputing frantically with his

neighbours in his fury.
"It is infamous treachery! Infamous!"
Again they call out—
"Vadier! Silence! Vadier! Vadier!"

"Citoyens!" commences Vadier—
But the speaker is interrupted by Robespierre who furiously persists in

claiming a hearing.
"Compel him to be quiet!" cries some one.
Thuriot rings his bell, and orders Robespierre to let Vadier speak.
"Vadier is to speak! Silence!"
Robespierre once more resigns himself to his fate, and returns to his
place.
The tumult dies away in a low murmur, above which Vadier's

mellifluous voice is heard.
"Citoyens!" he begins, "not until the 22nd Prairial did I open my eyes to
the double-dealing of that man who wears so many masks, and when he
cannot save one of his creatures consigns him to the scaffold!"
Laughter and applause run round the assembly. Thus encouraged,

Vadier continues—
"Only listen to him. He will tell you, with his usual modesty, that he is
the sole defender of Liberty, but so harassed, so discouraged, so persecuted!
... And it is he who attacks every one himself!"
"Hear, hear!" shouts a voice. "Excellent! That's it, exactly!"
"He says," continues Vadier, "that he is prevented from speaking. Yet,

strange to say, no one ever speaks but he!"
This new sally is hailed with renewed roars of laughter, and on every
side members are convulsed with merriment. Robespierre writhes in his
seat, casting glances of hatred and contempt around him.
But Vadier is in the right mood, and goes on—

"This is his regular refrain: 'I am the best friend of the Republic, and as
So-and-so has looked askance at me, So-and-so conspires against the
Republic, since I and the Republic are one!'"
Again laughter and cheers. "Very good, Vadier! That's it, Vadier!"
By this time the orator's ironical and facetious allusions have served
their purpose well, covering Robespierre with ridicule, and lowering him in
the eyes of many who were still wavering, hardly daring to join the
opposition.
But Vadier, carried away by success, wanders presently from the main
point, and loses himself in a maze of petty details. He repeats anecdotes
going the rounds of taverns and wine-shops, speaks of Robespierre's spies
dogging the heels of the Committee, and quotes his personal experience.
The attention of the assembly begins to flag. Robespierre feels this and,
taking instant advantage of it, tries to bring the Convention back to a sense
of its dignity.
"What! can you give credence to such arrant nonsense?"
But Tallien has realised the danger, and rushing towards the tribune
cries—
"I demand a hearing! We are wandering from the main question!"
"Fear not! I shall return to it!" replies Robespierre, who has now
reached the semicircle, and tries to enter the tribune by another stairway.
But several members standing on the steps push him back.
"No! we will have Tallien! Tallien!"
"After me!" cries Robespierre, still struggling.
"Tallien! Tallien has speech now!"
But Robespierre climbs up by the banister with the fury of a madman.

"Unjust, infamous judges! Will you then only listen to my enemies!"
The Incorruptible is answered by the one cry rising from a hundred

throats.
"Silence! Order! Order! Tallien! Tallien!"
Tallien is in the tribune.
"Citoyens!" he breaks out in a stentorian voice.
"Hold! Scoundrel!" shouts Robespierre, desperately.
"Have the madman arrested!" cries a voice in the crowd.
Robespierre still does his utmost to force a passage on the stairway.
"I will speak! I will be heard, wretches! I will speak!"
The uproar increases, aggravated by Robespierre's boisterous

pertinacity. The jingling of Thuriot's bell at last restores order, though not
without difficulty.
The opening words of Tallien's speech are already audible, amidst

enthusiastic cheers. Robespierre, held firmly by some of the deputies, has
ceased his struggles, and stands on the steps in an indignant attitude, his
features twitching convulsively, his eyes, glaring in hatred, fixed on the new
speaker who is preparing to hurl at him another shower of insults.
"The masks are torn away!" cries Tallien.
"Bravo! Bravo!"
"It was the speech delivered yesterday in this very hall, and repeated the
same evening at the Jacobin Club, that brought us face to face with this
unmasked tyrant, this vaunted patriot, who at the memorable epoch of the
invasion of the Tuileries and the arrest of the King, only emerged from his
den three days after the fight..."
Sneers and hisses reach Robespierre, repeated up to the very steps of the
tribune, below which he stands.
"This honourable citizen, who poses before the Committee of Public

Safety as champion of the oppressed, goes home, and in the secrecy of his
own house draws up the death-lists which have stained the altar of new-
born Liberty with so much blood!"
Renewed cheers and cries of "Hear! hear!" rise from nearly every seat in
the hall.
"But his dark designs are unveiled!" continues Tallien. "We shall crush
the tyrant before he has succeeded in swelling the river of blood with which
France is already inundated. His long and successful career of crime has
made him forget his habitual prudence. He has betrayed himself at the very
moment of triumph, when nothing is wanting to him but the name of king!
... I also was at the Jacobins' yesterday, and I trembled for the Republic
when I saw the vast army that flocked to the standard of this new Cromwell.
I invoked the shade of Brutus, and if the Convention will not have recourse
to the sword of justice to crush this tyrant, I am armed with a dagger that
shall pierce his heart!"
Tallien makes a movement as if to rush on Robespierre dagger in hand;

but he is arrested by a burst of unanimous applause. A hundred deputies
have risen and are calling out: "Bravo, Tallien! Bravo!"
The orator, in an attitude of defiance, gazes steadily at Robespierre,

who, grasping convulsively at the railings of the tribune, screams himself
hoarse, challenging Tallien and the deputies around, while they answer him
with abuse, shaking their fists in his face. It is a veritable Babel of cries,
appeals, and insults. The President, now upstanding, vainly tries to restore
order with his bell.
At last there is a lull, of which Robespierre attempts to take advantage.
"Vile wretches!" he cries, "would you condemn me unheard?"
But he is answered by a telling home-thrust—

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Test Bank for Marketing 2014, 17th Edition : Pride

2014 Principles of General, Organic, and Biological

10. A sales tax is an example of a transaction-based tax.

11. A tax on net income is an example of a transaction-based tax.

12. A sales tax is an example of an activity-based tax.

Multiple Choice Questions

29. Which of the following is not characteristic of a tax?

39. Which of the following statements regarding tax systems is false?

40. Which of the following is an example of a transaction-based tax?

41. Which of the following is an example of an activity-based tax?

42. Which of the following is an earmarked tax?

43. Which of the following characterizes a good tax base?

48. Which of the following statements concerning property taxes is false?

49. A sales tax can best be described as a(n):

50. Which of the following statements concerning sales taxes is false?

56. Which of the following is not characteristic of an excise tax?

68. Which type of tax is not levied by the federal government?

75. Which of the following statements about Treasury regulations is false?

76. Revenue rulings and revenue procedures are written by:

77. Which of the following is not considered administrative authority?

78. A revenue ruling is an example of:

79. Which of the following statements concerning judicial authority is false?

Short Answer Questions

A. How many taxpayers are identified in the above statement of facts?

85. Grant Wilson is an employee of Market Enterprises, a corporation operating in state A.

Chapter 01 Taxes and Taxing Jurisdictions Answer Key

True / False Questions

3. A tax is intended to deter or punish unacceptable behavior.

4. A tax is a payment to support the cost of government.

10. A sales tax is an example of a transaction-based tax.

11. A tax on net income is an example of a transaction-based tax.

12. A sales tax is an example of an activity-based tax.

Regulations are not laws, which can by enacted only by Congress.

Multiple Choice Questions

29. Which of the following is not characteristic of a tax?

39. Which of the following statements regarding tax systems is false?

40. Which of the following is an example of a transaction-based tax?

41. Which of the following is an example of an activity-based tax?

42. Which of the following is an earmarked tax?

43. Which of the following characterizes a good tax base?

(1% * $100,000) + (1.5% * $682,000) = $11,230

(3% * $500,000) + (5% * $282,000) = $29,100

48. Which of the following statements concerning property taxes is false?

49. A sales tax can best be described as a(n):

50. Which of the following statements concerning sales taxes is false?

Sales taxes typically apply to only a few select consumer services.

56. Which of the following is not characteristic of an excise tax?

Refer to Exhibit 1.1

68. Which type of tax is not levied by the federal government?

75. Which of the following statements about Treasury regulations is false?

76. Revenue rulings and revenue procedures are written by:

77. Which of the following is not considered administrative authority?

78. A revenue ruling is an example of:

79. Which of the following statements concerning judicial authority is false?

Short Answer Questions