Question 1

Identify which of the following statements is false.

Accepted Answer

A)  A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B)  If the taxpayer being audited does not concur with the proposed assessment, the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C)  During the audit process, if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax), then the taxpayer is precluded from filing a refund suit. 
D)  Interest on a deficiency accrues from the due date of the return through the payment date. 
A)  A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B)  If the taxpayer being audited does not concur with the proposed assessment, the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C)  During the audit process, if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax), then the taxpayer is precluded from filing a refund suit. 
D)  Interest on a deficiency accrues from the due date of the return through the payment date.

Question 2

The statute of limitations, which stipulates the time frame within which either the government or the taxpayer may request a redetermination of tax due, usually expires 6 years after the date on which the return is filed.

Accepted Answer

A) True 
 B)False

Question 3

Kelly, a calendar-year taxpayer, files her 2017 individual return on March 30, 2018, and pays the amount due at the same time. Later, she discovers some deductions that she should have claimed on the return. By what date must she file a claim for refund?

Accepted Answer

She would file by th

Question 4

On July 25 of the following year, Joy files her current calendar-year tax return without having requested an extension. On October 8, she pays the amount due. The tax shown on her return is $25,000. Her current-year withholding tax is $20,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Assume she did not commit fraud. Will Joy owe interest, and if so, on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr

Question 5

Identify which of the following statements is false.

Accepted Answer

A)  In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
B)  The failure-to-file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month) with a maximum additional penalty of 25%. 
C)  The failure-to-pay penalty is imposed at a rate of 5% per month (or fraction of a month) with a maximum penalty of 25%. 
D)  A different interest rate is charged to corporate and noncorporate taxpayers. 
A)  In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
B)  The failure-to-file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month) with a maximum additional penalty of 25%. 
C)  The failure-to-pay penalty is imposed at a rate of 5% per month (or fraction of a month) with a maximum penalty of 25%. 
D)  A different interest rate is charged to corporate and noncorporate taxpayers.

Question 6

The taxes shown on Kate's tax returns for 2017 and 2018 were $6,000 and $9,000, respectively. Kate's withholding tax for 2018 was $7,000 and she paid no estimated taxes. Kate filed her 2018 return on April 3, 2019, but she did not have sufficient funds to pay the balance due. She pays the $2,000 balance due on June 19, 2019. Kate's AGI for 2018 did not exceed $150,000. Calculate the penalties Kate owes on her 2018 tax return.

Accepted Answer

Kate's 2018 AGI did not exceed $150,000.

Question 7

A substantial understatement of tax liability involves which of the following?

Accepted Answer

A)  understatement of tax exceeding the greater of 10% of tax required to be shown on the return or $5,000 for individuals 
B)  underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
C)  underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
D)  $10,000 or more difference between the amount shown on the return and the correct amount due 
A)  understatement of tax exceeding the greater of 10% of tax required to be shown on the return or $5,000 for individuals 
B)  underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
C)  underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
D)  $10,000 or more difference between the amount shown on the return and the correct amount due

Question 8

Which, if any, of the following could result in penalties against an income tax return preparer? I. Knowing or reckless disclosure or use of tax information obtained in preparing a return.
II) A willful attempt to understate any client's tax liability on a return or claim for a refund.

Accepted Answer

A)  I only 
B)  II only 
C)  neither I nor II 
D)  both I and II 
A)  I only 
B)  II only 
C)  neither I nor II 
D)  both I and II

Question 9

On August 13 of the following year, Joy files her current calendar-year tax return and pays the amount due without having requested an extension. The tax shown on her return is $25,000. Her current-year withholding tax is $15,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Will Joy owe interest, and if so, on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr

Question 10

On August 13 of the following year, Joy files her current calendar-year tax return and pays the amount due without having requested an extension. The tax shown on her return is $25,000. Her current-year withholding tax is $15,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Calculate the penalties that the IRS is likely to assess. Ignore the penalty for underpayment of estimated taxes. Assume she did not commit fraud.

Accepted Answer

Failure-to-pay penalty -
0.005 × ($25,00

Question 11

Pete has reported a tax liability of $3,500 on his 2016 tax return. His 2017 withholding was $3,800. He did not file his 2017 return until June 12, 2018. What penalties does Pete owe?

Accepted Answer

Pete owes no penalty for failu

Question 12

You are preparing the tax return for Agre Corporation, which has sales of $50 million. Agre made a $2 million expenditure for which the appropriate tax treatment, deductible or capitalizable, is a gray area. The corporation's Chief Financial Officer wants you to deduct the expenditure. What tax compliance issues should you consider in deciding whether to deduct the expenditure?

Accepted Answer

• Will you as the tax return preparer ha

Question 13

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Accepted Answer

A)  $0. 
B)  $75. 
C)  $375. 
D)  $450. 
A)  $0. 
B)  $75. 
C)  $375. 
D)  $450.

Question 14

Which of the following is not a reason for relief from the substantial understatement penalty?

Accepted Answer

A)  disclosure of the relevant facts pertaining to the questionable tax return position 
B)  substantial authority for the tax return position 
C)  reliance on a tax return preparer 
D)  reasonable cause and a good faith effort to comply with the tax law 
A)  disclosure of the relevant facts pertaining to the questionable tax return position 
B)  substantial authority for the tax return position 
C)  reliance on a tax return preparer 
D)  reasonable cause and a good faith effort to comply with the tax law

Question 15

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

Accepted Answer

A)  $0. 
B)  $40. 
C)  $80. 
D)  $120. 
A)  $0. 
B)  $40. 
C)  $80. 
D)  $120.

Question 16

Which of the following statements regarding Circular 230 is false?

Accepted Answer

A)  Circular 230 applies to all tax return preparers. 
B)  Circular 230 defines practice before the IRS. 
C)  Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D)  Circular 230 applies to CPAs, enrolled agents, enrolled actuaries, and attorneys. 
A)  Circular 230 applies to all tax return preparers. 
B)  Circular 230 defines practice before the IRS. 
C)  Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D)  Circular 230 applies to CPAs, enrolled agents, enrolled actuaries, and attorneys.

Question 17

Identify which of the following statements is false.

Accepted Answer

A)  If the phrase "Entered under Rule 155" appears at the end of the Tax Court's opinion, the litigating parties must jointly determine the additional tax due. 
B)  A taxpayer does not have to pay the tax assessment before filing suit in a U.S. district court or the U.S. Court of Federal Claims. 
C)  Either the taxpayer or the government can appeal the decision of a court of original jurisdiction to the next higher court with the potential for a final ruling from the U.S. Supreme Court if a writ of certiorari is granted. 
D)  All of the above are false. 
A)  If the phrase "Entered under Rule 155" appears at the end of the Tax Court's opinion, the litigating parties must jointly determine the additional tax due. 
B)  A taxpayer does not have to pay the tax assessment before filing suit in a U.S. district court or the U.S. Court of Federal Claims. 
C)  Either the taxpayer or the government can appeal the decision of a court of original jurisdiction to the next higher court with the potential for a final ruling from the U.S. Supreme Court if a writ of certiorari is granted. 
D)  All of the above are false.

Question 18

If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension, what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

Accepted Answer

A)  $0 
B)  $6 
C)  $60 
D)  none of the above 
A)  $0 
B)  $6 
C)  $60 
D)  none of the above

Question 19

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

Accepted Answer

A)  $50 
B)  $250 
C)  $1,000 
D)  20% of the understatement 
A)  $50 
B)  $250 
C)  $1,000 
D)  20% of the understatement

Question 20

Linda's individual tax return for the current year is subject to an IRS audit. The IRS assesses a $10,000 deficiency, $4,000 of which is due to Linda's negligence. What is Linda's negligence penalty?

Accepted Answer

The negligence penalty is $800

Identify which of the following statements is false.

The statute of limitations, which stipulates the time frame within which either the government or the taxpayer may request a redetermination of tax due, usually expires 6 years after the date on which the return is filed.

Kelly, a calendar-year taxpayer, files her 2017 individual return on March 30, 2018, and pays the amount due at the same time. Later, she discovers some deductions that she should have claimed on the return. By what date must she file a claim for refund?

Identify which of the following statements is false.

A substantial understatement of tax liability involves which of the following?

Which, if any, of the following could result in penalties against an income tax return preparer? I. Knowing or reckless disclosure or use of tax information obtained in preparing a return. II) A willful attempt to understate any client's tax liability on a return or claim for a refund.

Pete has reported a tax liability of $3,500 on his 2016 tax return. His 2017 withholding was $3,800. He did not file his 2017 return until June 12, 2018. What penalties does Pete owe?

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Which of the following is not a reason for relief from the substantial understatement penalty?

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

Which of the following statements regarding Circular 230 is false?

Identify which of the following statements is false.

If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension, what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

Linda's individual tax return for the current year is subject to an IRS audit. The IRS assesses a $10,000 deficiency, $4,000 of which is due to Linda's negligence. What is Linda's negligence penalty?

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

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Exam 15: Administrative Procedures

Identify which of the following statements is false.

The statute of limitations, which stipulates the time frame within which either the government or the taxpayer may request a redetermination of tax due, usually expires 6 years after the date on which the return is filed.

Kelly, a calendar-year taxpayer, files her 2017 individual return on March 30, 2018, and pays the amount due at the same time. Later, she discovers some deductions that she should have claimed on the return. By what date must she file a claim for refund?

Identify which of the following statements is false.

A substantial understatement of tax liability involves which of the following?

Which, if any, of the following could result in penalties against an income tax return preparer? I. Knowing or reckless disclosure or use of tax information obtained in preparing a return. II) A willful attempt to understate any client's tax liability on a return or claim for a refund.

Pete has reported a tax liability of $3,500 on his 2016 tax return. His 2017 withholding was $3,800. He did not file his 2017 return until June 12, 2018. What penalties does Pete owe?

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Which of the following is not a reason for relief from the substantial understatement penalty?

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

Which of the following statements regarding Circular 230 is false?

Identify which of the following statements is false.

If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension, what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

Linda's individual tax return for the current year is subject to an IRS audit. The IRS assesses a $10,000 deficiency, $4,000 of which is due to Linda's negligence. What is Linda's negligence penalty?

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