Question 1

Which of the following is not a preparer penalty?

Accepted Answer

A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return. 
A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return. A

Question 2

Which of the following statements best describes the process of tax planning?

Accepted Answer

A) Tax planning is equivalent to tax evasion. 
B) Tax planning is the avoidance of "tax traps." 
C) Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability. 
D) Tax planning is the deferral of tax on income. 
E) Tax planning is the calculation of a taxpayer's marginal rate of tax. 
A) Tax planning is equivalent to tax evasion. 
B) Tax planning is the avoidance of "tax traps." 
C) Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability. 
D) Tax planning is the deferral of tax on income. 
E) Tax planning is the calculation of a taxpayer's marginal rate of tax. C

Question 3

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Accepted Answer

A) It directs taxpayers to other IRS publications with more details on specific taxpayer rights. 
B) It explains the examination,appeal,collection,and refund process. 
C) It states that a taxpayer is responsible for payment of only the correct amount of tax due,no more,no less. 
D) All of the above statements are correct. 
E) None of the above statements are correct. 
A) It directs taxpayers to other IRS publications with more details on specific taxpayer rights. 
B) It explains the examination,appeal,collection,and refund process. 
C) It states that a taxpayer is responsible for payment of only the correct amount of tax due,no more,no less. 
D) All of the above statements are correct. 
E) None of the above statements are correct. D

Question 4

Tax returns selected for most audits are selected by the Discriminant Function System.

Accepted Answer

A) True 
 B)False

Question 5

The statute of limitations for a tax return generally is 3 years.

Accepted Answer

A) True 
 B)False

Question 6

A taxpayer made estimated tax payments in excess of the tax due for the year,but failed to file a tax return.Since the taxes were paid in full,would there be a penalty?

Accepted Answer

The penalty for failure to fil

Question 7

Patricia has taxable income of $40,000 on which she pays income tax of $5,935.If Patricia's taxable income increases by $2,000,she will pay an additional tax of $500.What is Patricia's marginal tax rate?

Accepted Answer

A) 15.00 percent 
B) 14.84 percent 
C) 15.32 percent 
D) 25.00 percent 
E) None of the above 
A) 15.00 percent 
B) 14.84 percent 
C) 15.32 percent 
D) 25.00 percent 
E) None of the above

Question 8

Tax practitioners can be assessed a penalty for promoting an abusive tax shelter.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is the most common type of audit for an individual taxpayer?

Accepted Answer

A) Office audit 
B) Telephone audit 
C) Correspondence audit 
D) Field audit 
E) None of the above 
A) Office audit 
B) Telephone audit 
C) Correspondence audit 
D) Field audit 
E) None of the above

Question 10

If a calendar year taxpayer's 2013 individual income tax return is mailed on June 15,2014,the statute of limitations would normally run out on:

Accepted Answer

A) June 15,2016 
B) June 15,2017 
C) April 15,2016 
D) April 15,2017 
E) None of the above 
A) June 15,2016 
B) June 15,2017 
C) April 15,2016 
D) April 15,2017 
E) None of the above

Question 11

The Discriminant Function System is designed to identify tax returns that may contain errors.

Accepted Answer

A) True 
 B)False

Question 12

Tax evasion involves the use of illegal methods to reduce or avoid income tax.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

Accepted Answer

A) To provide the IRS with additional enforcement powers 
B) To grant to taxpayers the right to choose the time and method of payment of delinquent taxes 
C) To inform taxpayers of their rights in dealing with the IRS 
D) To inform taxpayers of the methods for properly completing their income tax returns 
E) None of the above 
A) To provide the IRS with additional enforcement powers 
B) To grant to taxpayers the right to choose the time and method of payment of delinquent taxes 
C) To inform taxpayers of their rights in dealing with the IRS 
D) To inform taxpayers of the methods for properly completing their income tax returns 
E) None of the above

Question 14

The Taxpayer Bill of Rights is summarized in IRS Publication 1.

Accepted Answer

A) True 
 B)False

Question 15

The statute of limitations for the deduction of a worthless security is 5 years.

Accepted Answer

A) True 
 B)False

Question 16

The tax law is administered by the Federal Trade Commission.

Accepted Answer

A) True 
 B)False

Question 17

Craig commits fraud on his tax return.It is found that he was $45,000 deficient in his tax because of the fraud.What would his penalty be?

Accepted Answer

A) $45,000 
B) $33,750 
C) $78,750 
D) $0 
A) $45,000 
B) $33,750 
C) $78,750 
D) $0

Question 18

Taxpayers are required by law to maintain records to facilitate an IRS audit.

Accepted Answer

A) True 
 B)False

Question 19

A "correspondence audit" by the IRS is conducted through the mail.

Accepted Answer

A) True 
 B)False

Question 20

Stephanie has taxable income of $45,400 and a tax liability of $7,285.If Stephanie's income increases by $2,000,her tax liability will be $7,785.
a.What is her average tax rate on the $45,400 of income?
b.What is her marginal tax rate?

Accepted Answer

a.16.05%,calculated

Which of the following is not a preparer penalty?

Which of the following statements best describes the process of tax planning?

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Tax returns selected for most audits are selected by the Discriminant Function System.

The statute of limitations for a tax return generally is 3 years.

A taxpayer made estimated tax payments in excess of the tax due for the year,but failed to file a tax return.Since the taxes were paid in full,would there be a penalty?

Patricia has taxable income of $40,000 on which she pays income tax of $5,935.If Patricia's taxable income increases by $2,000,she will pay an additional tax of $500.What is Patricia's marginal tax rate?

Tax practitioners can be assessed a penalty for promoting an abusive tax shelter.

Which of the following is the most common type of audit for an individual taxpayer?

If a calendar year taxpayer's 2013 individual income tax return is mailed on June 15,2014,the statute of limitations would normally run out on:

The Discriminant Function System is designed to identify tax returns that may contain errors.

Tax evasion involves the use of illegal methods to reduce or avoid income tax.

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

The Taxpayer Bill of Rights is summarized in IRS Publication 1.

The statute of limitations for the deduction of a worthless security is 5 years.

The tax law is administered by the Federal Trade Commission.

Craig commits fraud on his tax return.It is found that he was $45,000 deficient in his tax because of the fraud.What would his penalty be?

Taxpayers are required by law to maintain records to facilitate an IRS audit.

A "correspondence audit" by the IRS is conducted through the mail.

Stephanie has taxable income of $45,400 and a tax liability of $7,285.If Stephanie's income increases by $2,000,her tax liability will be $7,785. a.What is her average tax rate on the $45,400 of income? b.What is her marginal tax rate?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

Which of the following is not a preparer penalty?

Which of the following statements best describes the process of tax planning?

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Tax returns selected for most audits are selected by the Discriminant Function System.

The statute of limitations for a tax return generally is 3 years.

A taxpayer made estimated tax payments in excess of the tax due for the year,but failed to file a tax return.Since the taxes were paid in full,would there be a penalty?

Patricia has taxable income of $40,000 on which she pays income tax of $5,935.If Patricia's taxable income increases by $2,000,she will pay an additional tax of $500.What is Patricia's marginal tax rate?

Tax practitioners can be assessed a penalty for promoting an abusive tax shelter.

Which of the following is the most common type of audit for an individual taxpayer?

If a calendar year taxpayer's 2013 individual income tax return is mailed on June 15,2014,the statute of limitations would normally run out on:

The Discriminant Function System is designed to identify tax returns that may contain errors.

Tax evasion involves the use of illegal methods to reduce or avoid income tax.

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

The Taxpayer Bill of Rights is summarized in IRS Publication 1.

The statute of limitations for the deduction of a worthless security is 5 years.

The tax law is administered by the Federal Trade Commission.

Craig commits fraud on his tax return.It is found that he was $45,000 deficient in his tax because of the fraud.What would his penalty be?

Taxpayers are required by law to maintain records to facilitate an IRS audit.

A "correspondence audit" by the IRS is conducted through the mail.

Stephanie has taxable income of $45,400 and a tax liability of $7,285.If Stephanie's income increases by $2,000,her tax liability will be $7,785. a.What is her average tax rate on the $45,400 of income? b.What is her marginal tax rate?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters