Question 1

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

Accepted Answer

A)  Federal district court. 
B)  Tax Court. 
C)  U.S. Court of Federal Claims. 
D)  all of the above 
A)  Federal district court. 
B)  Tax Court. 
C)  U.S. Court of Federal Claims. 
D)  all of the above

Question 2

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

Accepted Answer

A)  underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
B)  underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
C)  understatement of tax exceeding the greater of 10% of 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)  underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
B)  underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
C)  understatement of tax exceeding the greater of 10% of 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 3

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits. Determine the amount of the minimum quarterly estimated tax payments required to avoi the penalty. Assume your client's adjusted gross income last year was $140,000. $$\begin{array} { | l | r | } 
\hline \text { Last year's tax liability } & \$ 40,000 \
\hline \text { This year'sestimated total tax } & 44,000 \
\hline \text { Taxes to be withheld for this year } & 9,000 \
\hline
\end{array}$$

Accepted Answer

A)  $8,750 
B)  $7,650 
C)  $7,750 
D)  $11,000 
A)  $8,750 
B)  $7,650 
C)  $7,750 
D)  $11,000

Question 4

Identify which of the following statements is true.

Accepted Answer

A)  Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
B)  The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C)  The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
D)  All of the above are false. 
A)  Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
B)  The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C)  The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
D)  All of the above are false.

Question 5

Which of the following communications between an accountant and client are not privileged?
a) An accountant orally communicates to his client that he should set up a foreign subsidiary to shift taxable in a lower tax jurisdiction.
b) An accountant privately submits to the client a plan for shifting taxable income to a lower tax jurisdiction.
c) During a meeting in which a client is asking for advice relating to criminal fraud, the client tells his accounta he lied to the IRS.

Accepted Answer

Communications (b) and (c) are not privi

Question 6

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

The answer of On August 13 of the following year,...

Question 7

Billy, a calendar- year taxpayer, files his current year individual tax return on August 17 of the following year without having requested an extension. His return reports an amount due of $5,000. Billy pays this amount on November 23 of the following year. What are Billy's penalties for his failure to file and his failure to pay his tax on time? Assume Billy did not commit fraud.

Accepted Answer

The answer of Billy, a calendar- year taxpayer, files his...

Question 8

Which of the following items can be omitted from a taxpayer's request for a ruling?

Accepted Answer

A)  the particular conclusion desired by the taxpayer 
B)  the location of the IRS district office that has examination jurisdiction 
C)  a detailed explanation of the transaction 
D)  names, addresses, and taxpayer identification numbers of all interested parties 
A)  the particular conclusion desired by the taxpayer 
B)  the location of the IRS district office that has examination jurisdiction 
C)  a detailed explanation of the transaction 
D)  names, addresses, and taxpayer identification numbers of all interested parties

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Accepted Answer

A) True 
 B)False

Question 11

Identify which of the following statements is true.

Accepted Answer

A)  A penalty for substantial understatement will potentially be assessed on an individual if the underpayment of tax exceeds the greater of 15% of the tax shown on the return or $5,000. 
B)  Substantial authority exists for a position that is supported by a decision rendered by the Court of Appeals for the taxpayer's own circuit. 
C)  An individual taxpayer may be subject to a penalty for underpayment of estimated taxes if his balance of tax due when he files is $500. 
D)  All of the above are true. 
A)  A penalty for substantial understatement will potentially be assessed on an individual if the underpayment of tax exceeds the greater of 15% of the tax shown on the return or $5,000. 
B)  Substantial authority exists for a position that is supported by a decision rendered by the Court of Appeals for the taxpayer's own circuit. 
C)  An individual taxpayer may be subject to a penalty for underpayment of estimated taxes if his balance of tax due when he files is $500. 
D)  All of the above are true.

Question 12

Identify which of the following statements is true.

Accepted Answer

A)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
B)  The signing of Form 870 allows the taxpayer to wait for 30 interest- free days after the billing date to pay the tax. 
C)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
D)  All of the above are true. 
A)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
B)  The signing of Form 870 allows the taxpayer to wait for 30 interest- free days after the billing date to pay the tax. 
C)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
D)  All of the above are true.

Question 13

The IRS audits Kiara's current- year individual return and determines that, among other errors, she negligently did not report dividend income of $10,000. The deficiency with respect to the dividends is $2,800. The IRS argues for an additional $12,000 deficiency for various other errors that do not involve negligence. What is Kiara's negligence penalty for the $14,800 in deficiencies?

Accepted Answer

The neglig

Question 14

Identify which of the following statements is true.

Accepted Answer

A)  Signing of Form 870- AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
B)  Form 870- AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
C)  The IRS will issue a 90- day letter (a Statutory Notice of Deficiency) if the taxpayer does not file a protest letter within 10 days of the date of the 30- day letter. 
D)  All of the above are false. 
A)  Signing of Form 870- AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
B)  Form 870- AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
C)  The IRS will issue a 90- day letter (a Statutory Notice of Deficiency) if the taxpayer does not file a protest letter within 10 days of the date of the 30- day letter. 
D)  All of the above are false.

Question 15

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)  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. 
C)  The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
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)  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. 
C)  The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
D)  All of the above are true.

Question 16

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

Accepted Answer

A) True 
 B)False

Question 17

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

Accepted Answer

A)  $1,400 
B)  $5,600 
C)  $1,750 
D)  $700 
A)  $1,400 
B)  $5,600 
C)  $1,750 
D)  $700

Question 18

Christie and Billy jointly file this year. Billy intentionally omits $5,000 in gambling winnings. Christie fraudulently deducts $1,000 in business expenses. The IRS audits the return, assesses a $2,500 deficiency and begins collection efforts two years after the timely filing of the return. Christie and Billy divorced one year before the deficiency was assessed. Can Christie receive any tax relief from the full $2,500 deficiency?

Accepted Answer

Yes, under the proportional liability el

Question 19

All of the following requirements must be met in order to establish innocent spouse relief except which of the following?

Accepted Answer

A)  The return contains an understatement of tax attributable to the erroneous item(s) of an individual filing it. 
B)  Based on all the facts and circumstances, holding the other individual for the deficiency would be inequitable. 
C)  The request for innocent spouse relief is made no later than one year after the IRS begins its collection efforts. 
D)  The requesting individual establishes that he or she neither knew nor had reason to know of any or all of the understatement. 
A)  The return contains an understatement of tax attributable to the erroneous item(s) of an individual filing it. 
B)  Based on all the facts and circumstances, holding the other individual for the deficiency would be inequitable. 
C)  The request for innocent spouse relief is made no later than one year after the IRS begins its collection efforts. 
D)  The requesting individual establishes that he or she neither knew nor had reason to know of any or all of the understatement.

Question 20

Tax return preparers can be penalized for the following activities except

Accepted Answer

A)  failure to provide the preparer's identification number on the return. 
B)  failure to give a copy of the return to the taxpayer. 
C)  failure to maintain IRS continuing education requirements. 
D)  failure to sign a return. 
A)  failure to provide the preparer's identification number on the return. 
B)  failure to give a copy of the return to the taxpayer. 
C)  failure to maintain IRS continuing education requirements. 
D)  failure to sign a return.

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

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

Identify which of the following statements is true.

Which of the following items can be omitted from a taxpayer's request for a ruling?

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

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

All of the following requirements must be met in order to establish innocent spouse relief except which of the following?

Tax return preparers can be penalized for the following activities except

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

The court in which the taxpayer does not have to pay the tax and then litigate for a refund is the

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

Identify which of the following statements is true.

Which of the following items can be omitted from a taxpayer's request for a ruling?

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

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

All of the following requirements must be met in order to establish innocent spouse relief except which of the following?

Tax return preparers can be penalized for the following activities except

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