Question 1

How long does a taxpayer have to file a petition with the U.S. Tax Court following the date of the Statutory Notice of Deficiency?

Accepted Answer

A)  three months 
B)  180 days 
C)  90 days 
D)  30 days 
A)  three months 
B)  180 days 
C)  90 days 
D)  30 days C

Question 2

The IRS provides advice concerning an issue that arises during an audit by issuing

Accepted Answer

A)  a technical advice memorandum. 
B)  an audit memorandum. 
C)  a private letter ruling. 
D)  a revenue ruling. 
A)  a technical advice memorandum. 
B)  an audit memorandum. 
C)  a private letter ruling. 
D)  a revenue ruling. A

Question 3

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. 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-
$0.005 \times ( \$ 25,000 - \$ 20,000 ) \times 6 \text { months }\quad \quad  \$ 150$
Failure- to-file penalty -
$0.05 \times ( \$ 25,000 - \$ 20,000 ) \times 4 \text { months } \quad \quad \$ 1,000$
Minus: failure- to-pay penalty for 4 months$\quad$ (100) $\quad$$\underline { 900 }$
Total penalties $\quad$$\$ \mathbf { 1 , 0 5 0 }$

Question 4

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

Question 5

Lucy files her current- year individual income tax return on August 5 of the following year, without having requested an extension. Her total tax is $10,000. Lucy pays $7,500 in a timely manner and the $2,500 balance when she files the return. Lucy did not engage in fraud and has no reasonable cause for late filing and late payment. Compute Lucy's penalties.

Accepted Answer

The answer of Lucy files her current- year individual income...

Question 6

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

Accepted Answer

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

Question 7

Gerald requests an extension for filing his last year's individual income tax return. His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is

Accepted Answer

A)  $0. 
B)  $300. 
C)  $400. 
D)  $40. 
A)  $0. 
B)  $300. 
C)  $400. 
D)  $40.

Question 8

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

Accepted Answer

According to judicial doctrine, certain

Question 9

Identify which of the following statements is true.

Accepted Answer

A)  If both the failure- to- file and the failure- to- pay penalties are owed, the taxpayer will incur a maximum addition to tax of 5.5% per month. 
B)  The failure- to- pay penalty is waived if the additional tax due with the filing of the extended return does not exceed 15% of the tax owed for the year. 
C)  Individuals having substantial income from sources not subject to regular withholding generally should make quarterly estimated tax payments to the IRS. 
D)  All of the above are false. 
A)  If both the failure- to- file and the failure- to- pay penalties are owed, the taxpayer will incur a maximum addition to tax of 5.5% per month. 
B)  The failure- to- pay penalty is waived if the additional tax due with the filing of the extended return does not exceed 15% of the tax owed for the year. 
C)  Individuals having substantial income from sources not subject to regular withholding generally should make quarterly estimated tax payments to the IRS. 
D)  All of the above are false.

Question 10

Identify which of the following statements is false.

Accepted Answer

A)  If the taxpayer and the appeals officer fail to reach agreement, the IRS issues a 90- day letter. 
B)  Appeals officers usually have the operating authority to settle disputes with taxpayers 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)  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." 
A)  If the taxpayer and the appeals officer fail to reach agreement, the IRS issues a 90- day letter. 
B)  Appeals officers usually have the operating authority to settle disputes with taxpayers 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)  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."

Question 11

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

Accepted Answer

a) The civil fraud penalty is

Question 12

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 13

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

Question 15

One of your corporate clients has recently filed for bankruptcy. In the course of the proceedings, you (a) prepare a plan of reorganization that alters the rights of preferred stockholders, (b) notify the company's creditors of an impending bulk transfer of the company's assets, (c) review IRS secured claims against these assets, (d) restructure the company's debt by reducing its principal amount and extending its maturity, and (e) advise the bankruptcy court as to how this restructuring will impact the company's NOLs. Which of these activities, if any, constitutes the unauthorized practice of law?

Accepted Answer

Activities (a), (b), and (c) constitute

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90- day letter). 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The 90- day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
D)  All of the above are false. 
A)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90- day letter). 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The 90- day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
D)  All of the above are false.

Question 17

Identify which of the following statements is false.

Accepted Answer

A)  Interest on a deficiency accrues from the due date of the return through the payment date. 
B)  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. 
C)  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. 
D)  A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
A)  Interest on a deficiency accrues from the due date of the return through the payment date. 
B)  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. 
C)  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. 
D)  A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue.

Question 18

Identify which of the following statements is false.

Accepted Answer

A)  If the Supreme Court decides to hear a case, it grants certiorari. 
B)  A letter ruling is a written statement issued to a taxpayer by the IRS that interprets and applies the tax laws to that taxpayer's specific set of facts. 
C)  So- called private letter rulings are made public after confidential information is eliminated. 
D)  Only the taxpayer can appeal the decision of a court of original jurisdiction to the next higher court. 
A)  If the Supreme Court decides to hear a case, it grants certiorari. 
B)  A letter ruling is a written statement issued to a taxpayer by the IRS that interprets and applies the tax laws to that taxpayer's specific set of facts. 
C)  So- called private letter rulings are made public after confidential information is eliminated. 
D)  Only the taxpayer can appeal the decision of a court of original jurisdiction to the next higher court.

Question 19

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 20

Identify which of the following statements is true.

Accepted Answer

A)  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. 
B)  Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
C)  If a taxpayer fails to file a return, the statute of limitations is extended to 10 years. 
D)  All of the above are false. 
A)  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. 
B)  Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
C)  If a taxpayer fails to file a return, the statute of limitations is extended to 10 years. 
D)  All of the above are false.

How long does a taxpayer have to file a petition with the U.S. Tax Court following the date of the Statutory Notice of Deficiency?

The IRS provides advice concerning an issue that arises during an audit by issuing

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?

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

Gerald requests an extension for filing his last year's individual income tax return. His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

Identify which of the following statements is true.

Identify which of the following statements is false.

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

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.

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is false.

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?

Identify which of the following statements is true.

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

Filters

Exam 15: Administrative Procedures

How long does a taxpayer have to file a petition with the U.S. Tax Court following the date of the Statutory Notice of Deficiency?

The IRS provides advice concerning an issue that arises during an audit by issuing

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?

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

Gerald requests an extension for filing his last year's individual income tax return. His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

Identify which of the following statements is true.

Identify which of the following statements is false.

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

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.

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is false.

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?

Identify which of the following statements is true.

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

Filters