Question 1

All of the following are part of the tax research process except:

Accepted Answer

A) Establish the facts 
B) Locate relevant authority 
C) Identify the issues 
D) Communicate the findings 
E) All are part of the tax research process 
A) Establish the facts 
B) Locate relevant authority 
C) Identify the issues 
D) Communicate the findings 
E) All are part of the tax research process

Question 2

James can invest in a project that will cost $70,000.The project is expected to pay him $95,000 after-tax in 5 years.What is the maximum discount rate, as a whole number, that he could use to evaluate the project that would yield a positive cash flow?

Accepted Answer

A) 5% 
B) 6% 
C) 7% 
D) 8% 
A) 5% 
B) 6% 
C) 7% 
D) 8%

Question 3

The Golsen Rule

Accepted Answer

A) requires the Tax Court to follow the decisions of the District Courts 
B) can result in opposite holdings on identical facts in the Tax Court 
C) requires the Supreme Court to hear cases in which the holdings of the Appellate Courts differ 
D) applies to the US Federal District Court only 
A) requires the Tax Court to follow the decisions of the District Courts 
B) can result in opposite holdings on identical facts in the Tax Court 
C) requires the Supreme Court to hear cases in which the holdings of the Appellate Courts differ 
D) applies to the US Federal District Court only

Question 4

The Golsen rule requires the Tax Court to follow all other Federal District Court decisions in the same Circuit.

Accepted Answer

A) True 
 B)False

Question 5

An individual may apply for an automatic extension of time to file a return of

Accepted Answer

A) Extensions are not permitted 
B) 3 months 
C) 4 months 
D) 6 months 
A) Extensions are not permitted 
B) 3 months 
C) 4 months 
D) 6 months

Question 6

Acquiescence by the Internal Revenue Service's Commissioner means that the IRS will follow the decision in the future.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following does not deal with a CPA's standard of conduct

Accepted Answer

A) Treasury Circular 230 
B) AICPA Code of Conduct 
C) Internal Revenue Service Manual 
D) Statement of Standards for Tax Services 
A) Treasury Circular 230 
B) AICPA Code of Conduct 
C) Internal Revenue Service Manual 
D) Statement of Standards for Tax Services

Question 8

The business purpose doctrine:

Accepted Answer

A) Requires a transaction to be initiated by a business 
B) Requires a transaction to benefit the business owner 
C) Requires the transaction to have an economic purpose other than tax avoidance 
D) Requires the treatment of a transaction to be based on reality not appearances 
A) Requires a transaction to be initiated by a business 
B) Requires a transaction to benefit the business owner 
C) Requires the transaction to have an economic purpose other than tax avoidance 
D) Requires the treatment of a transaction to be based on reality not appearances

Question 9

If a tax return preparer prepares a return that involves a "listed transaction," the preparer can avoid all penalties if

Accepted Answer

A) the position is not unreasonable. 
B) the position has a possibility of success. 
C) the preparer has substantial authority for the position 
D) the position has no support but there is no evidence of fraud. 
A) the position is not unreasonable. 
B) the position has a possibility of success. 
C) the preparer has substantial authority for the position 
D) the position has no support but there is no evidence of fraud.

Question 10

If a firm's discount rate is lower than another firm's, the present value of its future cash flows will be higher.

Accepted Answer

A) True 
 B)False

Question 11

If a tax preparer is convicted of criminal tax evasion, the preparer may be subject to a penalty of

Accepted Answer

A) a $100,000 fine 
B) prison 
C) Both a and b 
D) Neither a nor b 
A) a $100,000 fine 
B) prison 
C) Both a and b 
D) Neither a nor b

Question 12

The Internal Revenue Code is divided into

Accepted Answer

A) Chapters and sections only 
B) Titles and subtitles only 
C) Subtitles, chapters, subchapters and sections 
D) Titles, chapters and sections 
A) Chapters and sections only 
B) Titles and subtitles only 
C) Subtitles, chapters, subchapters and sections 
D) Titles, chapters and sections

Question 13

Which type of audit is most frequently used for examination of business returns?

Accepted Answer

A) Correspondence audit 
B) Office audit 
C) Noncompliance audit 
D) Field audit 
A) Correspondence audit 
B) Office audit 
C) Noncompliance audit 
D) Field audit

Question 14

How long after receiving a Statutory Notice of Deficiency does the taxpayer have to file a petition with the Tax Court?

Accepted Answer

A) 30 days 
B) 60 days 
C) 90 days 
D) 6 months 
A) 30 days 
B) 60 days 
C) 90 days 
D) 6 months

Question 15

What is the minimum penalty for a taxpayer who fails to file his or her return for over 60 days past the due date without reasonable cause?

Accepted Answer

A) The amount owed on the return 
B) $135 
C) The amount owed on the return or $210, whichever is less 
D) 4.5% of the amount owed on the return. 
A) The amount owed on the return 
B) $135 
C) The amount owed on the return or $210, whichever is less 
D) 4.5% of the amount owed on the return.

Question 16

Which of the following has the least weight of authority when deciding a tax issue?

Accepted Answer

A) Code 
B) Committee Reports 
C) Regulations 
D) Letter ruling 
A) Code 
B) Committee Reports 
C) Regulations 
D) Letter ruling

Question 17

If the Supreme Court decides to hear an appeal of a tax case, it will grant a

Accepted Answer

A) writ of habeas corpus 
B) writ of stare decisis 
C) writ of appeal remanding 
D) writ of certiorari 
A) writ of habeas corpus 
B) writ of stare decisis 
C) writ of appeal remanding 
D) writ of certiorari

Question 18

Eduardo filed his 2018 tax return on March 15, 2019.Eduardo accidentally omitted $10,000 of income from his individual tax return.The total gross income shown on the tax return was $35,000.When will the statute of limitations expire for Eduardo's 2018 tax return?

Accepted Answer

A) March 15, 2022 
B) March 15, 2025 
C) April 15, 2022 
D) April 15, 2025 
A) March 15, 2022 
B) March 15, 2025 
C) April 15, 2022 
D) April 15, 2025

Question 19

Walter did not file his 2018 tax return that was due April 15, 2019 until June 2, 2019.

Accepted Answer

A) When does the statute of limitations expire for this return assuming he did not file for an automatic extension? 
B) When does the statute of limitations expire if Walter forgot to report a land sale that occurred on January 10, 2018? He had a $20,000 gain on the transaction and he reported gross income for 2018 of $75,000? 
C) When does the statute of limitations expire if Walter deliberately omitted the $20,000 gain on the land sale? 
A) When does the statute of limitations expire for this return assuming he did not file for an automatic extension? 
B) When does the statute of limitations expire if Walter forgot to report a land sale that occurred on January 10, 2018? He had a $20,000 gain on the transaction and he reported gross income for 2018 of $75,000? 
C) When does the statute of limitations expire if Walter deliberately omitted the $20,000 gain on the land sale?

Question 20

Which of the following paid tax return preparers must have a preparer tax identification number?

Accepted Answer

A) CPAs 
B) Attorneys 
C) Enrolled Agents 
D) All of the above 
A) CPAs 
B) Attorneys 
C) Enrolled Agents 
D) All of the above

All of the following are part of the tax research process except:

James can invest in a project that will cost $70,000.The project is expected to pay him $95,000 after-tax in 5 years.What is the maximum discount rate, as a whole number, that he could use to evaluate the project that would yield a positive cash flow?

The Golsen Rule

The Golsen rule requires the Tax Court to follow all other Federal District Court decisions in the same Circuit.

An individual may apply for an automatic extension of time to file a return of

Acquiescence by the Internal Revenue Service's Commissioner means that the IRS will follow the decision in the future.

Which of the following does not deal with a CPA's standard of conduct

The business purpose doctrine:

If a tax return preparer prepares a return that involves a "listed transaction," the preparer can avoid all penalties if

If a firm's discount rate is lower than another firm's, the present value of its future cash flows will be higher.

If a tax preparer is convicted of criminal tax evasion, the preparer may be subject to a penalty of

The Internal Revenue Code is divided into

Which type of audit is most frequently used for examination of business returns?

How long after receiving a Statutory Notice of Deficiency does the taxpayer have to file a petition with the Tax Court?

What is the minimum penalty for a taxpayer who fails to file his or her return for over 60 days past the due date without reasonable cause?

Which of the following has the least weight of authority when deciding a tax issue?

If the Supreme Court decides to hear an appeal of a tax case, it will grant a

Eduardo filed his 2018 tax return on March 15, 2019.Eduardo accidentally omitted $10,000 of income from his individual tax return.The total gross income shown on the tax return was $35,000.When will the statute of limitations expire for Eduardo's 2018 tax return?

Walter did not file his 2018 tax return that was due April 15, 2019 until June 2, 2019.

Which of the following paid tax return preparers must have a preparer tax identification number?

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

All of the following are part of the tax research process except:

James can invest in a project that will cost $70,000.The project is expected to pay him $95,000 after-tax in 5 years.What is the maximum discount rate, as a whole number, that he could use to evaluate the project that would yield a positive cash flow?

The Golsen Rule

The Golsen rule requires the Tax Court to follow all other Federal District Court decisions in the same Circuit.

An individual may apply for an automatic extension of time to file a return of

Acquiescence by the Internal Revenue Service's Commissioner means that the IRS will follow the decision in the future.

Which of the following does not deal with a CPA's standard of conduct

The business purpose doctrine:

If a tax return preparer prepares a return that involves a "listed transaction," the preparer can avoid all penalties if

If a firm's discount rate is lower than another firm's, the present value of its future cash flows will be higher.

If a tax preparer is convicted of criminal tax evasion, the preparer may be subject to a penalty of

The Internal Revenue Code is divided into

Which type of audit is most frequently used for examination of business returns?

How long after receiving a Statutory Notice of Deficiency does the taxpayer have to file a petition with the Tax Court?

What is the minimum penalty for a taxpayer who fails to file his or her return for over 60 days past the due date without reasonable cause?

Which of the following has the least weight of authority when deciding a tax issue?

If the Supreme Court decides to hear an appeal of a tax case, it will grant a

Eduardo filed his 2018 tax return on March 15, 2019.Eduardo accidentally omitted $10,000 of income from his individual tax return.The total gross income shown on the tax return was $35,000.When will the statute of limitations expire for Eduardo's 2018 tax return?

Walter did not file his 2018 tax return that was due April 15, 2019 until June 2, 2019.

Which of the following paid tax return preparers must have a preparer tax identification number?

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