Exam 15: Administrative Procedures

Which of the following communications between an accountant and client are privileged? a) During the preparation of her 2018 tax return, Tammy informs her accountant that she contributed $25,000 t qualified charitable organization. b) After filing his tax return, a client mentions to his accountant that he forgot to report a $7,000 prize that he w playing bingo. He asks how he should correct the error. c) A client tells his accountant that he will no longer pay alimony to his ex- wife.

On April 15, 2015, a married couple filed their joint 2014 tax return showing gross income of $120,000. Their return was prepared by a professional tax preparer who mistakenly omitted $45,000 of income, which the preparer in good faith considered to be nontaxable. No information with regard to this omitted income was disclosed on the return or attached statements. By what date must the IRS assert a notice of deficiency before the statute of limitations expires?

A taxpayer can automatically escape the penalty for underpayment of taxes by

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?

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.

Identify which of the following statements is false.

Terry files his return on March 31. The return shows taxes of $6,000, and Terry pays this entire amount when he files his return. By what time must he file a claim of refund?

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?

Kristina and Victor filed a joint return for the current year. They are in the 31% marginal tax bracket. Victor did not know that Kristina failed to report a prize valued at $16,000 that she won. She used the money to buy Victor a motorcycle. Does Victor meet the tests for relief under the innocent spouse provisions?

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

Identify which of the following statements is false.

Identify which of the following statements is false.

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

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

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

Jayne and Jon jointly file a tax return this year. Jayne fraudulently reports two expenses on Schedule C: $2,000 and $2,500. The IRS audits the return, assesses a $1,050 deficiency, and begins collection efforts two years after the timely filing by Jayne and Jon. What must Jon do to be relieved of the $1,050 tax liability?

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

The majority of the individual tax returns that are audited are selected under the DIF program.

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?

Which one of the following statements about letter rulings is false?