Question 1

Which penalty can equal 75 percent of the tax underpayment?

Accepted Answer

A) Failure to file 
B) Failure to pay 
C) Negligence 
D) Fraud 
A) Failure to file 
B) Failure to pay 
C) Negligence 
D) Fraud D

Question 2

What is the first notice of a proposed deficiency that a taxpayer receives?

Accepted Answer

A) Examination letter 
B) 90-day letter 
C) 60-day letter 
D) 30-day letter 
A) Examination letter 
B) 90-day letter 
C) 60-day letter 
D) 30-day letter D

Question 3

Which of the following committees is not involved in the tax writing process?

Accepted Answer

A) Ways and Means 
B) Joint Conference 
C) Judiciary 
D) Senate Finance 
A) Ways and Means 
B) Joint Conference 
C) Judiciary 
D) Senate Finance C

Question 4

What is the unextended due date for a corporation with a March 31 year-end?

Accepted Answer

A) April 15 
B) May 15 
C) June 15 
D) July 15 
A) April 15 
B) May 15 
C) June 15 
D) July 15

Question 5

All of the following are primary sources of tax law except:

Accepted Answer

A) Internal Revenue Code 
B) Treasury regulations 
C) Report of the House Ways and Means Committee 
D) Supreme Court decisions 
E) All are primary sources of the tax law 
A) Internal Revenue Code 
B) Treasury regulations 
C) Report of the House Ways and Means Committee 
D) Supreme Court decisions 
E) All are primary sources of the tax law

Question 6

Crispen Corporation can invest in a project that costs $400,000.The project is expected to have an after-tax return of $250,000 in each of years 1 and 2.Crispen normally uses a 10 percent discount rate to evaluate projects but feels it should use 12 percent to compensate for inflation.How much difference does the rate make in the after-tax net present value of the project?

Accepted Answer

A) $50,000 
B) $22,500 
C) $20,000 
D) $11,250 
A) $50,000 
B) $22,500 
C) $20,000 
D) $11,250

Question 7

The primary source of tax authority that provides explanations, definitions, and examples of tax laws is the

Accepted Answer

A) Internal Revenue Code 
B) Revenue rulings 
C) Regulations 
D) Letter rulings 
A) Internal Revenue Code 
B) Revenue rulings 
C) Regulations 
D) Letter rulings

Question 8

How much tax can be saved if John shifts $2,000 of income to his 18 year old dependent son? John is in the 22 percent tax bracket and his son has no other income that is taxable in 2019.

Accepted Answer

A) $1,000 
B) $500 
C) $345 
D) $100 
A) $1,000 
B) $500 
C) $345 
D) $100

Question 9

Only CPAs, Enrolled Agents, and Attorneys who prepare tax returns for pay must obtain preparer tax identification numbers.

Accepted Answer

A) True 
 B)False

Question 10

An open-fact situation means that

Accepted Answer

A) all of the client's transactions have occurred and the research focuses on finding support for the action already taken. 
B) all of the client's transactions have not yet occurred so the events may be carefully planned. 
C) the client's tax return has not yet been filed. 
D) the client is requesting assistance regarding a previously filed tax return. 
A) all of the client's transactions have occurred and the research focuses on finding support for the action already taken. 
B) all of the client's transactions have not yet occurred so the events may be carefully planned. 
C) the client's tax return has not yet been filed. 
D) the client is requesting assistance regarding a previously filed tax return.

Question 11

The statute of limitations for a return that inadvertently overstates expenses by 30 percent of gross revenues is

Accepted Answer

A) 3 years 
B) 6 years 
C) 10 years 
D) Unlimited 
A) 3 years 
B) 6 years 
C) 10 years 
D) Unlimited

Question 12

If a CPA finds an error on a previously filed tax return of a client, he or she should advise the client to file an amended return to correct the error.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following types of returns does not have an unextended due date of the 15th day of the 4th month after the end of the tax year?

Accepted Answer

A) S corporations 
B) C Corporations 
C) Individuals 
D) Trusts 
A) S corporations 
B) C Corporations 
C) Individuals 
D) Trusts

Question 14

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 provide notification that the taxpayer's return has been selected for audit. 
C) after a 90-day notice of deficiency notifying the taxpayer there is only a 30-day period to file a protest in court 
D) as the first notice of a proposed deficiency 
A) only if the taxpayer is more than 30 days late in filing the tax return. 
B) to provide notification that the taxpayer's return has been selected for audit. 
C) after a 90-day notice of deficiency notifying the taxpayer there is only a 30-day period to file a protest in court 
D) as the first notice of a proposed deficiency

Question 15

Jacko Corporation has two projects in which it can invest.Project A has a $500,000 initial cost and will return $700,000 after tax in 4 years.Project B has a $300,000 initial cost and its after-tax returns will be $150,000 in year 1 and $200,000 in year 2.Using a 7 percent discount rate for evaluation, which project(s) should Jacko invest in?

Accepted Answer

A) Project A only 
B) Project B only 
C) Both projects 
D) Neither project 
A) Project A only 
B) Project B only 
C) Both projects 
D) Neither project

Question 16

15 The Cumulative Bulletin contains reports of all the committees involved in tax writing as well as statements made on the floor of the House or Senate.

Accepted Answer

A) True 
 B)False

Question 17

Merced Company has invested $200,000 in a project.It had before tax net income of $100,000 in year 1, $150,000 in year 2, and $125,000 in year 3.What is the net present value of this project's after-tax net cash flow if Merced's discount rate is 8 percent and its marginal tax rate is 21 percent in all years?

Accepted Answer

A) $53,116 
B) $120,000 
C) $253,116 
D) $320,400 
A) $53,116 
B) $120,000 
C) $253,116 
D) $320,400

Question 18

The Internal Revenue Service must pay interest on any refund that is not mailed within 30 days of the date the taxpayer's tax return is filed.

Accepted Answer

A) True 
 B)False

Question 19

Copp Co.can invest in a project that costs $200,000.It is expected to provide a lump sum after-tax return of $300,000.If Copp uses an 8 percent discount rate for evaluation, in what year must it recover the $300,000 to produce a positive net cash flow?

Accepted Answer

A) 3rd year 
B) 4th year 
C) 5th year 
D) 6th year 
A) 3rd year 
B) 4th year 
C) 5th year 
D) 6th year

Question 20

What is the penalty for taxpayers who fail to pay their tax liability with a timely filed tax return for the taxes owing?

Accepted Answer

A) 5% per month 
B) 2% per month 
C) 0.5% per month 
D) $100 per month 
A) 5% per month 
B) 2% per month 
C) 0.5% per month 
D) $100 per month

Which penalty can equal 75 percent of the tax underpayment?

What is the first notice of a proposed deficiency that a taxpayer receives?

Which of the following committees is not involved in the tax writing process?

What is the unextended due date for a corporation with a March 31 year-end?

All of the following are primary sources of tax law except:

The primary source of tax authority that provides explanations, definitions, and examples of tax laws is the

How much tax can be saved if John shifts $2,000 of income to his 18 year old dependent son? John is in the 22 percent tax bracket and his son has no other income that is taxable in 2019.

Only CPAs, Enrolled Agents, and Attorneys who prepare tax returns for pay must obtain preparer tax identification numbers.

An open-fact situation means that

The statute of limitations for a return that inadvertently overstates expenses by 30 percent of gross revenues is

If a CPA finds an error on a previously filed tax return of a client, he or she should advise the client to file an amended return to correct the error.

Which of the following types of returns does not have an unextended due date of the 15th day of the 4th month after the end of the tax year?

A taxpayer will receive a 30-day letter

15 The Cumulative Bulletin contains reports of all the committees involved in tax writing as well as statements made on the floor of the House or Senate.

The Internal Revenue Service must pay interest on any refund that is not mailed within 30 days of the date the taxpayer's tax return is filed.

Copp Co.can invest in a project that costs $200,000.It is expected to provide a lump sum after-tax return of $300,000.If Copp uses an 8 percent discount rate for evaluation, in what year must it recover the $300,000 to produce a positive net cash flow?

What is the penalty for taxpayers who fail to pay their tax liability with a timely filed tax return for the taxes owing?

Introduction to Taxation

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 2: The Tax Practice Environment

Which penalty can equal 75 percent of the tax underpayment?

What is the first notice of a proposed deficiency that a taxpayer receives?

Which of the following committees is not involved in the tax writing process?

What is the unextended due date for a corporation with a March 31 year-end?

All of the following are primary sources of tax law except:

The primary source of tax authority that provides explanations, definitions, and examples of tax laws is the

How much tax can be saved if John shifts $2,000 of income to his 18 year old dependent son? John is in the 22 percent tax bracket and his son has no other income that is taxable in 2019.

Only CPAs, Enrolled Agents, and Attorneys who prepare tax returns for pay must obtain preparer tax identification numbers.

An open-fact situation means that

The statute of limitations for a return that inadvertently overstates expenses by 30 percent of gross revenues is

If a CPA finds an error on a previously filed tax return of a client, he or she should advise the client to file an amended return to correct the error.

Which of the following types of returns does not have an unextended due date of the 15th day of the 4th month after the end of the tax year?

A taxpayer will receive a 30-day letter

15 The Cumulative Bulletin contains reports of all the committees involved in tax writing as well as statements made on the floor of the House or Senate.

The Internal Revenue Service must pay interest on any refund that is not mailed within 30 days of the date the taxpayer's tax return is filed.

Copp Co.can invest in a project that costs $200,000.It is expected to provide a lump sum after-tax return of $300,000.If Copp uses an 8 percent discount rate for evaluation, in what year must it recover the $300,000 to produce a positive net cash flow?

What is the penalty for taxpayers who fail to pay their tax liability with a timely filed tax return for the taxes owing?

Introduction to Taxation

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters