Question 1

The Internal Revenue Service is part of the

Accepted Answer

A) Congress. 
B) Treasury Department. 
C) Federal Bureau of Investigation. 
D) U)S.Customs Department. 
A) Congress. 
B) Treasury Department. 
C) Federal Bureau of Investigation. 
D) U)S.Customs Department. B

Question 2

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 D

Question 3

The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

Accepted Answer

A) preparing federal income tax returns. 
B) determining the tax effect of proposed transactions. 
C) representing clients in criminal investigations. 
D) representing taxpayers before the U.S.Tax Court. 
A) preparing federal income tax returns. 
B) determining the tax effect of proposed transactions. 
C) representing clients in criminal investigations. 
D) representing taxpayers before the U.S.Tax Court. C

Question 4

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

Accepted Answer

A) True 
 B)False

Question 5

Identify which of the following statements is false.

Accepted Answer

A) Appeals officers usually have the operating authority to settle disputes with taxpayers based on the "hazards of litigation." 
B) When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle with the taxpayer based on the "hazards of litigation." 
C) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
D) If the taxpayer and the appeals officer fail to reach agreement,the IRS issues a 90-day letter. 
A) Appeals officers usually have the operating authority to settle disputes with taxpayers based on the "hazards of litigation." 
B) When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle with the taxpayer based on the "hazards of litigation." 
C) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
D) If the taxpayer and the appeals officer fail to reach agreement,the IRS issues a 90-day letter.

Question 6

Identify which of the following statements is false.

Accepted Answer

A) The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B) Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C) A corporation must file a tax return even if it has no gross income. 
D) Extensions of time for filing tax returns may be obtained. 
A) The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B) Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C) A corporation must file a tax return even if it has no gross income. 
D) Extensions of time for filing tax returns may be obtained.

Question 7

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 8

Identify which of the following statements is false.

Accepted Answer

A) The IRS issues annually a revenue procedure that prescribes how a letter ruling should be requested and the information to be contained in the ruling request. 
B) The request for a ruling may contain a suggested conclusion (or answer)that the taxpayer proposes that the IRS adopt in the described situation. 
C) As a practical consideration,taxpayers always find it preferable to obtain an advance ruling on questionable tax situations. 
D) Third parties may not cite private letter rulings as authority for the tax consequences of their transactions. 
A) The IRS issues annually a revenue procedure that prescribes how a letter ruling should be requested and the information to be contained in the ruling request. 
B) The request for a ruling may contain a suggested conclusion (or answer)that the taxpayer proposes that the IRS adopt in the described situation. 
C) As a practical consideration,taxpayers always find it preferable to obtain an advance ruling on questionable tax situations. 
D) Third parties may not cite private letter rulings as authority for the tax consequences of their transactions.

Question 9

The statute of limitations is unlimited for a tax return that is never filed.

Accepted Answer

A) True 
 B)False

Question 10

Identify which of the following statements is true.

Accepted Answer

A) If a taxpayer fails to file a return,the statute of limitations is extended to 10 years. 
B) If a couple files a joint return but only one spouse had income,only the spouse with income is responsible for paying any tax due. 
C) Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
D) All of the above are false. 
A) If a taxpayer fails to file a return,the statute of limitations is extended to 10 years. 
B) If a couple files a joint return but only one spouse had income,only the spouse with income is responsible for paying any tax due. 
C) Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
D) All of the above are false.

Question 11

A letter ruling is a written determination that interprets and applies the tax laws to the taxpayer's specific set of facts.

Accepted Answer

A) True 
 B)False

Question 12

If a return's due date is extended,a taxpayer

Accepted Answer

A) also extends the period in which to pay taxes without interest. 
B) still should pay the tax by the original return due date. 
C) has 30 days following the original due date to pay estimated taxes without penalty. 
D) has 30 days following the original due date to pay estimated taxes without interest. 
A) also extends the period in which to pay taxes without interest. 
B) still should pay the tax by the original return due date. 
C) has 30 days following the original due date to pay estimated taxes without penalty. 
D) has 30 days following the original due date to pay estimated taxes without interest.

Question 13

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

Accepted Answer

A) TCMP. 
B) DIF program. 
C) instant audit program. 
D) 1040 program. 
A) TCMP. 
B) DIF program. 
C) instant audit program. 
D) 1040 program.

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Identify which of the following statements is true.

Accepted Answer

A) 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 six years after the date on which the return is filed. 
B) The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
C) If a taxpayer omits from gross income an amount in excess of 25% of the gross income shown on his return,the statute of limitations is five years. 
D) All of the above are true. 
A) 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 six years after the date on which the return is filed. 
B) The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
C) If a taxpayer omits from gross income an amount in excess of 25% of the gross income shown on his return,the statute of limitations is five years. 
D) All of the above are true.

Question 17

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

Question 18

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 19

Identify which of the following statements is false.

Accepted Answer

A) In general,the taxpayer has the burden of proof in Tax Court cases.However,the IRS has the burden of proof for issues raised after the issuance of the 90-day letter. 
B) A taxpayer may want to avoid using the Tax Court to litigate an issue because decisions from this court cannot be appealed. 
C) The Tax Court can be used to litigate a tax issue without first paying the tax assessment. 
D) In order to litigate in the Tax Court,a petition must be filed within 90 days of the issuance of a notice of deficiency. 
A) In general,the taxpayer has the burden of proof in Tax Court cases.However,the IRS has the burden of proof for issues raised after the issuance of the 90-day letter. 
B) A taxpayer may want to avoid using the Tax Court to litigate an issue because decisions from this court cannot be appealed. 
C) The Tax Court can be used to litigate a tax issue without first paying the tax assessment. 
D) In order to litigate in the Tax Court,a petition must be filed within 90 days of the issuance of a notice of deficiency.

Question 20

Steve files his return on April 1 and pays the entire amount of tax for the year at that time,$5,000.He is audited and pays the deficiency of $1,500 two years later.The maximum amount Steve may file a claim for refund for eighteen months later is

Accepted Answer

A) $6,500. 
B) $5,000. 
C) $1,500. 
D) some other amount. 
A) $6,500. 
B) $5,000. 
C) $1,500. 
D) some other amount.

Exam 15: Administrative Procedures

The Internal Revenue Service is part of the

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

The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

Identify which of the following statements is false.

Identify which of the following statements is false.

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

Identify which of the following statements is false.

The statute of limitations is unlimited for a tax return that is never filed.

Identify which of the following statements is true.

A letter ruling is a written determination that interprets and applies the tax laws to the taxpayer's specific set of facts.

If a return's due date is extended,a taxpayer

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

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.

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

Identify which of the following statements is true.

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

Identify which of the following statements is false.

Identify which of the following statements is false.

Steve files his return on April 1 and pays the entire amount of tax for the year at that time,$5,000.He is audited and pays the deficiency of $1,500 two years later.The maximum amount Steve may file a claim for refund for eighteen months later is

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

U.S. Taxation of Foreign-Related Transactions

an Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Business Expenses and Deferred Compensation

Itemized Deductions

Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods,tax Credits,and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

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