Which, If Any, of the Following Provisions of the Tax

question 23

Multiple Choice

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

• A) Penalties are imposed for failure to file a return or pay a tax on time.
• B) Prepaid income is taxed in the year received and not in the year earned.
• C) Annual adjustments for indexation increases the amount of the standard deduction allowed.
• D) Personal casualty losses in Federally-declared disaster areas must exceed 10% of AGI to be deductible.
• E) A deduction is allowed for charitable contributions.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on.

Scarce Goods

Products or resources that are limited in availability and cannot meet all the demands of consumers.

Comparative Advantage

The ability of a country or firm to produce a specific good or service at a lower opportunity cost than its competitors.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choice.