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

question 118

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, 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:

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Times Interest Earned Ratio

The times interest earned ratio is a financial metric used to measure a company's ability to meet its debt obligations by comparing its income before interest and tax (EBIT) to its interest expenses.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Inventory Turnover Ratio

A measure of how often a company sells and replaces its stock of goods during a period, calculated as cost of goods sold divided by average inventory.