Exam 2: The Tax Practice Environment

An individual may apply for an automatic extension of time to file a return of

An open-fact situation means that

Which of the following committees is not involved in the tax writing process?

All of the following are primary sources of tax law except:

Crispen Corporation can invest in a project that costs $400,000. The project is expected to have an after-tax return of $250,000 in each of years 1 and 2. Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 percent to compensate for inflation. How much difference does the rate make in the after-tax net present value of the project?

Eduardo filed his 2017 tax return on March 15, 2018. Eduardo accidentally omitted $10,000 of income from his individual tax return. The total gross income shown on the tax return was $35,000. When will the statute of limitations expire for Eduardo's 2017 tax return?

If a tax preparer is convicted of criminal tax evasion, the preparer may be subject to a penalty of

Tax avoidance is the minimization of the tax burden by using acceptable, legal alternatives.

The Internal Revenue Service is part of:

The Tax Cuts and Jobs Act is numbered H.R. 1 and after passage by Congress became P.L. 115-97. The prefix and the suffix of the public law number refer to the following, respectively:

William just did not like figuring out his taxes each year and he usually had so little income that he didn't owe taxes. He never filed an extension even though he seldom got around to filing before October or November. He finally filed his 2017 return in September of 2018 when he remembered he had sold some stock in early 2017 for a small profit. Unfortunately, he owed $125 in taxes because of the sale. What is William's failure to file penalty?

What are three factors that can affect the after-tax cash flow of a project? How does each affect this cash flow?

Changing which of the following factors as indicated would decrease the after-tax net cash flow of a project:

Peanut Co. has 2 projects in which it can invest. Project X has a $300,000 initial cost and will return $600,000 before tax in year 2. Project Y has $600,000 initial cost and will return $1,000,000 before tax in year 4. The company uses an 8 percent discount rate for project evaluation and its marginal tax rate is expected to be 21 percent in all years. Which project(s) should Peanut Co. invest in?

Kitty's tax return, which she filed on April 15, showed a balance due of $8,500. She did not have the money to pay this amount. On September 20, she was finally able to borrow sufficient money to pay the debt. What is Kitty's late payment penalty?

A decision in the small case division of the Tax Court can be appealed only to

The higher a firm's marginal tax rate used for project evaluation, the greater the net cash flow from the project.

What is meant when the Commissioner of the Internal Revenue Service acquiesces to a court decision?

What is the unextended due date for a corporation with a March 31 year-end?

The Internal Revenue Service is part of the Justice Department.