The Use of Estimates on a Tax Return Should Be

question 22

Multiple Choice

The use of estimates on a tax return should be prominently disclosed on the face of the tax return if:

• A) The estimates involved deductions for meals and entertainment
• B) The estimates involved business-related automobile usage
• C) The taxpayer was unavailable to participate in the tax return preparation process due to illness or death
• D) The estimates result in a change in a taxpayer's tax liability by "a sum equal to or greater than $1,000"

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Definitions:

Federal Gasoline Tax

A tax imposed by the federal government on the sale of gasoline, primarily used to fund transportation projects.

Price Elasticity

A measure of the sensitivity of quantity demanded or supplied to a change in price, indicating how a product's demand or supply reacts to price changes.

Income Elasticity

A measure of how much the demand for a good is affected by changes in consumers' income.

Excise Tax

A tax levied on specific goods or services, such as tobacco or gasoline, typically imposed at the manufacturing or retail level.