Tax Exam 1
Chapter 1: Overview of Taxes, Audit Process

Transfer Tax: Tax on donor, not donee * Gift Tax: living transfer of property; $14,000/yr/donee exclusion ($28,000 if joint), unlimited marital & charity deduction, once in a lifetime exemption for gifts & estate of $5,340,000 * Estate Tax: combine with taxable gifts; to derive taxable estate, you are entitled to subtract contributions to spouse & charity. Only eligible for exemption if not used for gift tax purposes.
Sales Tax: applied by state w/additional amnt imposed by city level
Use Tax: prevents avoidance of sales tax (same rate as sales tax- use or consumption of personal property)
FICA Tax: employee & employer--social security tax (6.2% up to $117,000) & medicare tax (1.45% unlimited); .9% med. tax on earned income above $200,000 for single & HOH and $250,000 for joint (only employees & on combined earned income of both spouses)
Payment Requirements: must pay by normal filing date (April 15); unpaid taxes = fed short-term rate + specified %. Gov is not required to pay interest on refund within 45 days after the filing due date for return, otherwise same rate as underpayments.
Late-Filing and Late-Payment Penalty: fail to file an income tax return = 5% penalty/mo of the unpaid balance up to 25% of tax balance due. After 5 mo, drops to ½%/mo of balance due in addition to interest due – no penalty for failure to file a tax return when no balance is due, can wave penalty charge , but not interest charge.
Statute of Limitations: period of time where audit may be conducted or taxpayer may amend their return for a refund. Any tax imposed must be assessed w/in 3 yrs. of the filing or return due date (whichever is later) ; a claim for refund must be filed win 3 yrs from date the return was filed (due date). Exceptions: no return filed or return = fraudulent, no