Question 1

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 2

The IRS will issue a ruling

Accepted Answer

A)  only if regulations have been issued on the subject. 
B)  on a completed transaction for which a return has been filed. 
C)  to clarify the tax treatment of a transaction. 
D)  on prospective transactions only. 
A)  only if regulations have been issued on the subject. 
B)  on a completed transaction for which a return has been filed. 
C)  to clarify the tax treatment of a transaction. 
D)  on prospective transactions only.

Question 3

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 4

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

Question 5

A taxpayer will receive a 30- day letter

Accepted Answer

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

Question 6

Explain the four conditions that must be met in civil cases for the burden of proving any factual issue relevant to the determination of taxpayer liability to rest with the IRS.

Accepted Answer

The taxpayer must introduce "credible ev

Question 7

Identify which of the following statements is false.

Accepted Answer

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

Question 8

The IRS audited the tax returns of Dan Jackson, a gifted painter. It contended that, between 2003 and 2005, Jackson received $500,000 for his paintings, but reported only $75,000. Jackson attributed the shortfall to his receipt of cash at art fairs and street fairs. He allegedly concealed the cash payments in separate bank accounts unbeknownst to his CPA. What tax compliance issues regarding the alleged underreporting are pertinent to the CPA?

Accepted Answer

Dan Jackson, his agent, and CPA (tax ret

Question 9

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

Accepted Answer

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

Question 10

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

Accepted Answer

A taxpayer should initially look to prim

Question 11

A six- year statute of limitation rule applies if the taxpayer

Accepted Answer

A)  understates AGI by 25%. 
B)  understates gross income by 25%. 
C)  understates taxable income by 25%. 
D)  none of the above 
A)  understates AGI by 25%. 
B)  understates gross income by 25%. 
C)  understates taxable income by 25%. 
D)  none of the above

Question 12

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

Question 13

Kelly, a calendar- year taxpayer, files her 2008 individual return on March 30, 2013, 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 14

The "automatic" extension period for filing an individual return is seven months.

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The taxes shown on Kate's tax returns for 2012 and 2013 were $6,000 and $9,000, respectively. Kate's withholding tax for 2009 was $7,000 and she paid no estimated taxes. Kate filed her 2013 return on April 3, 2014, but she did not have sufficient funds to pay the balance due. She pays the $2,000 balance due on June 19, 2014. Kate's AGI for 2013 did not exceed $150,000. Calculate the penalties Kate owes on her 2013 tax return.

Accepted Answer

Kate's 2013 AGI did not exceed $150,000.

Question 19

Richard recently won a popular television reality show and its one million dollar prize. However, he omitted the prize money from his tax return for the year. What penalties can the IRS assess?

Accepted Answer

• Criminal or civil fraud
• Negligence o

Question 20

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

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

The IRS will issue a ruling

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.

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

A taxpayer will receive a 30- day letter

Explain the four conditions that must be met in civil cases for the burden of proving any factual issue relevant to the determination of taxpayer liability to rest with the IRS.

Identify which of the following statements is false.

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

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

A six- year statute of limitation rule applies if the taxpayer

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

Kelly, a calendar- year taxpayer, files her 2008 individual return on March 30, 2013, 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?

The "automatic" extension period for filing an individual return is seven months.

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

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

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

Richard recently won a popular television reality show and its one million dollar prize. However, he omitted the prize money from his tax return for the year. What penalties can the IRS assess?

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.

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

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

The IRS will issue a ruling

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.

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

A taxpayer will receive a 30- day letter

Explain the four conditions that must be met in civil cases for the burden of proving any factual issue relevant to the determination of taxpayer liability to rest with the IRS.

Identify which of the following statements is false.

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

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

A six- year statute of limitation rule applies if the taxpayer

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

Kelly, a calendar- year taxpayer, files her 2008 individual return on March 30, 2013, 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?

The "automatic" extension period for filing an individual return is seven months.

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

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

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

Richard recently won a popular television reality show and its one million dollar prize. However, he omitted the prize money from his tax return for the year. What penalties can the IRS assess?

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.

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