Exam 15: Administrative Procedures

Linda's individual tax return for the current year is subject to an IRS audit. The IRS assesses a $10,000 deficiency, $4,000 of which is due to Linda's negligence. What is Linda's negligence penalty?

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?

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

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.

Which of the following statements regarding Circular 230 is false?

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

Gerald requests an extension for filing his last year's individual income tax return. His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is

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

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

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?

What is the requirement for a substantial understatement of tax for individuals?

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.

Identify which of the following statements is true.

A taxpayer will receive a 30- day letter

On July 25 of the following year, Joy files her current calendar- year tax return. She had requested extensions as required. On October 8, she pays the amount due. The tax shown on her return is $22,000. Her current- year withholding tax is $21,000. 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.

Pete has reported a tax liability of $3,500 on his 2016 tax return. His 2017 withholding was $3,800. He did not file his 2017 return until June 12, 2018. What penalties does Pete owe?

The Internal Revenue Service is part of the

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

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

Jeff's tax liability for last year was $30,000. Jeff projects that his tax for this year will be only $25,000. Jeff is self- employed and, thus, will have no withholding. His AGI for last year did not exceed $150,000. How much estimated tax, at a minimum, should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?