Question 1

Which of the following activities is protected by accountant-client privilege?

Accepted Answer

A)  written communications between a CPA and a corporation regarding a tax shelter 
B)  communications related to tax return preparation 
C)  communications related to criminal tax evasion 
D)  advice given regarding tax issues in a divorce 
A)  written communications between a CPA and a corporation regarding a tax shelter 
B)  communications related to tax return preparation 
C)  communications related to criminal tax evasion 
D)  advice given regarding tax issues in a divorce D

Question 2

What is the IRS guideline for determining whether a tax return position has substantial authority?

Accepted Answer

A)  A person knowledgeable in the tax law concludes that the position has a something less than 50% likelihood of being supported. 
B)  A person knowledgeable in the tax law concludes that the position has at least a 50% likelihood of being supported. 
C)  A person knowledgeable in the tax law concludes that the position has at least a two-thirds likelihood of being supported. 
D)  A person knowledgeable in the tax law concludes that the position has at least a 75% likelihood of being supported. 
A)  A person knowledgeable in the tax law concludes that the position has a something less than 50% likelihood of being supported. 
B)  A person knowledgeable in the tax law concludes that the position has at least a 50% likelihood of being supported. 
C)  A person knowledgeable in the tax law concludes that the position has at least a two-thirds likelihood of being supported. 
D)  A person knowledgeable in the tax law concludes that the position has at least a 75% likelihood of being supported. A

Question 3

Identify which of the following statements is false.

Accepted Answer

A)  If fraud is asserted in a tax transaction, the burden of proof falls on the IRS. 
B)  The civil fraud penalty consists of 75% of the tax underpayment attributable to fraud plus 25% of the interest payable on the portion of the underpayment resulting from the fraud. 
C)  The government must prove its case "beyond a reasonable doubt" in order for the court or jury to convict a taxpayer of criminal fraud. 
D)  The fraud penalty can be imposed with respect to income, gift, and estate tax returns. 
A)  If fraud is asserted in a tax transaction, the burden of proof falls on the IRS. 
B)  The civil fraud penalty consists of 75% of the tax underpayment attributable to fraud plus 25% of the interest payable on the portion of the underpayment resulting from the fraud. 
C)  The government must prove its case "beyond a reasonable doubt" in order for the court or jury to convict a taxpayer of criminal fraud. 
D)  The fraud penalty can be imposed with respect to income, gift, and estate tax returns. B

Question 4

Anyone who prepares a tax return is subject to the provisions of Circular 230.

Accepted Answer

A) True 
 B)False

Question 5

Christie and Billy jointly file this year. Billy intentionally omits $5,000 in gambling winnings. Christie fraudulently deducts $1,000 in business expenses. The IRS audits the return, assesses a $2,500 deficiency and begins collection efforts two years after the timely filing of the return. Christie and Billy divorced one year before the deficiency was assessed. Can Christie receive any tax relief from the full $2,500 deficiency?

Accepted Answer

Yes, under the proportional liability el

Question 6

Jeff's tax liability for last year was $30,000. Jeff projects that his tax for this year will be only $25,000. Jeff is self-employed and, thus, will have no withholding. His AGI for last year did not exceed $150,000. How much estimated tax, at a minimum, should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?

Accepted Answer

Jeff's AGI for last year does not exceed

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C)  The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D)  All of the above are true. 
A)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C)  The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D)  All of the above are true.

Question 8

Billy, a calendar-year taxpayer, files his current year individual tax return on August 17 of the following year without having requested an extension. His return reports an amount due of $5,000. Billy pays this amount on November 23 of the following year. What are Billy's penalties for his failure to file and his failure to pay his tax on time? Assume Billy did not commit fraud.

Accepted Answer

Failure-to-pay penalty -
0.005 × $5,000

Question 9

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Accepted Answer

A) True 
 B)False

Question 10

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Accepted Answer

The IRS is organized functionally into f

Question 11

A taxpayer will receive a 30-day letter

Accepted Answer

A)  to notify him that the return was selected for audit. 
B)  after a response to the 90-day letter with a protest. 
C)  only if the taxpayer does not sign Form 870. 
D)  only if the taxpayer is more than 30 days late in filing the tax return. 
A)  to notify him that the return was selected for audit. 
B)  after a response to the 90-day letter with a protest. 
C)  only if the taxpayer does not sign Form 870. 
D)  only if the taxpayer is more than 30 days late in filing the tax return.

Question 12

What is the requirement for a substantial understatement of tax for individuals?

Accepted Answer

A)  The understatement exceeds 10% of the tax required to be shown on the return. 
B)  The understatement exceeds $5,000. 
C)  The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000. 
D)  The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000. 
A)  The understatement exceeds 10% of the tax required to be shown on the return. 
B)  The understatement exceeds $5,000. 
C)  The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000. 
D)  The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000.

Question 13

What is the penalty for a tax return preparer who willfully attempts to understate taxes, or intentionally disregards the tax rules and regulations?

Accepted Answer

A)  $50 
B)  $250 
C)  $5,000 
D)  20% of the understatement 
A)  $50 
B)  $250 
C)  $5,000 
D)  20% of the understatement

Question 14

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

Accepted Answer

Regulation of tax return preparers occur

Question 15

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items can be omitted from a taxpayer's request for a ruling?

Accepted Answer

A)  names, addresses, and taxpayer identification numbers of all interested parties 
B)  a detailed explanation of the transaction 
C)  the particular conclusion desired by the taxpayer 
D)  the location of the IRS district office that has examination jurisdiction 
A)  names, addresses, and taxpayer identification numbers of all interested parties 
B)  a detailed explanation of the transaction 
C)  the particular conclusion desired by the taxpayer 
D)  the location of the IRS district office that has examination jurisdiction

Question 17

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Accepted Answer

A)  U.S. Court of Federal Claims. 
B)  Federal district court. 
C)  Tax Court. 
D)  all of the above 
A)  U.S. Court of Federal Claims. 
B)  Federal district court. 
C)  Tax Court. 
D)  all of the above

Question 18

Identify which of the following statements is true.

Accepted Answer

A)  The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
B)  The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C)  Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
D)  All of the above are false. 
A)  The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
B)  The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C)  Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
D)  All of the above are false.

Question 19

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

Accepted Answer

A)  Head of Household 
B)  Hope and Lifetime Learning Credit 
C)  Child Tax Credit and Earned Income Tax Credit 
D)  All of the above 
A)  Head of Household 
B)  Hope and Lifetime Learning Credit 
C)  Child Tax Credit and Earned Income Tax Credit 
D)  All of the above

Question 20

Identify which of the following statements is false.

Accepted Answer

A)  The majority of the individual tax returns that are audited are selected under the DIF program. 
B)  The TCMP audit program has been temporarily suspended by the IRS and replaced in part by lifestyle audits. 
C)  The IRS is authorized to pay a reward to individuals who provide information resulting in increased collections. 
D)  All of the above are false. 
A)  The majority of the individual tax returns that are audited are selected under the DIF program. 
B)  The TCMP audit program has been temporarily suspended by the IRS and replaced in part by lifestyle audits. 
C)  The IRS is authorized to pay a reward to individuals who provide information resulting in increased collections. 
D)  All of the above are false.

Which of the following activities is protected by accountant-client privilege?

What is the IRS guideline for determining whether a tax return position has substantial authority?

Identify which of the following statements is false.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

Identify which of the following statements is true.

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

A taxpayer will receive a 30-day letter

What is the requirement for a substantial understatement of tax for individuals?

What is the penalty for a tax return preparer who willfully attempts to understate taxes, or intentionally disregards the tax rules and regulations?

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Which of the following items can be omitted from a taxpayer's request for a ruling?

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Identify which of the following statements is true.

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

Identify which of the following statements is false.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Us Taxation of Foreign-Related Transactions

Filters

Exam 15: Administrative Procedures

Which of the following activities is protected by accountant-client privilege?

What is the IRS guideline for determining whether a tax return position has substantial authority?

Identify which of the following statements is false.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

Identify which of the following statements is true.

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

A taxpayer will receive a 30-day letter

What is the requirement for a substantial understatement of tax for individuals?

What is the penalty for a tax return preparer who willfully attempts to understate taxes, or intentionally disregards the tax rules and regulations?

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Which of the following items can be omitted from a taxpayer's request for a ruling?

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Identify which of the following statements is true.

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

Identify which of the following statements is false.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Us Taxation of Foreign-Related Transactions

Filters