Exam 1 Study Guide
Main Themes from each Chapter to understand
*This is not a comprehensive list of topics covered that may be included on the quiz and exam
Chapter 1 * Definition of a Tax * Standards for evaluating a tax (Adam Smith) * Tax Rate Structures – define, identify, and calculate (marginal, average, effective, proportional, progressive, regressive) * Major types of US taxes – general level * You do not need to know how to calculate SS/employment tax (but do need to know how to calculate how much SS income is taxable – CH 3) * Sources of Federal Income Tax Law – general level * Income tax terminology * General income tax filing requirements and IRS procedure – know at a general level * Individual Income Tax Calculation – know the formula (p. 1-26) and how to calculate tax using the tax rate schedule (p. 1-22) – IMPORTANT!! * For vs. From Deductions – general level * Know how to use standard deduction vs. itemized deductions * Know how to use personal and dependency exemptions * Tax Planning – understand basics * You do not need to be able to do present value calculations (p. 1-30) but should understand this concept * Understand tax evasion vs. avoidance and basic ethical considerations in tax practice

Chapter 2 * Understand generally how concepts, constructs and doctrines fit together * Understand, identify, and apply all of the concepts, constructs and doctrines * Tax Benefit Rule – understand when and how much income to include when a state tax refund is received (hint – always consider whether they itemized and whether they would have itemized after the refund is considered) * Capital Recovery – start to understand how basis is calculated and how it affects gain and loss calculations
Chapter 3

* Know what constitutes income and how income is defined