Question 1

Identify which of the following statements is true.

Accepted Answer

A)  If a couple files a joint return but only one spouse had income, only the spouse with income is responsible for paying any tax due. 
B)  Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
C)  If a taxpayer fails to file a return, the statute of limitations is extended to 10 years. 
D)  All of the above are false. 
A)  If a couple files a joint return but only one spouse had income, only the spouse with income is responsible for paying any tax due. 
B)  Joint and several liability means that each spouse is potentially liable for the full amount of tax due. 
C)  If a taxpayer fails to file a return, the statute of limitations is extended to 10 years. 
D)  All of the above are false.

Question 2

Identify which of the following statements is false.

Accepted Answer

A)  Interest on underpayments is calculated using daily compounding and covers a time period from the original due date of the return until the date of payment. 
B)  Interest is charged on underpayments, or paid on overpayments, at a rate of three percentage points higher than the federal short- term rate. 
C)  Interest is imposed on any tax not paid by the due date of the return (determined without regard to extensions). 
D)  Any tax not paid by the due date for the return is subject to an interest charge. 
A)  Interest on underpayments is calculated using daily compounding and covers a time period from the original due date of the return until the date of payment. 
B)  Interest is charged on underpayments, or paid on overpayments, at a rate of three percentage points higher than the federal short- term rate. 
C)  Interest is imposed on any tax not paid by the due date of the return (determined without regard to extensions). 
D)  Any tax not paid by the due date for the return is subject to an interest charge.

Question 3

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 4

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 5

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

Accepted Answer

According to judicial doctrine, certain

Question 6

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 7

Identify which of the following statements is false.

Accepted Answer

A)  A different interest rate is charged to corporate and noncorporate taxpayers. 
B)  In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
C)  The failure- to- file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month) with a maximum additional penalty of 25%. 
D)  The failure- to- pay penalty is imposed at a rate of 5% per month (or fraction of a month) with a maximum penalty of 25%. 
A)  A different interest rate is charged to corporate and noncorporate taxpayers. 
B)  In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
C)  The failure- to- file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month) with a maximum additional penalty of 25%. 
D)  The failure- to- pay penalty is imposed at a rate of 5% per month (or fraction of a month) with a maximum penalty of 25%.

Question 8

On July 25 of the following year, Joy files her current calendar- year tax return without having requested an extension. On October 8, she pays the amount due. The tax shown on her return is $25,000. Her current- year withholding tax is $20,000. Joy pays no estimated taxes and does not claim any tax credits on her current- year return. Assume she did not commit fraud. Will Joy owe interest, and if so, on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr

Question 9

Which of the following is not a reason for relief from the substantial understatement penalty?

Accepted Answer

A)  reliance on a tax return preparer 
B)  disclosure of the relevant facts pertaining to the questionable tax return position 
C)  reasonable cause and a good faith effort to comply with the tax law 
D)  substantial authority for the tax return position 
A)  reliance on a tax return preparer 
B)  disclosure of the relevant facts pertaining to the questionable tax return position 
C)  reasonable cause and a good faith effort to comply with the tax law 
D)  substantial authority for the tax return position

Question 10

If a return's due date is extended, a taxpayer

Accepted Answer

A)  still should pay the tax by the original return due date. 
B)  also extends the period in which to pay taxes without interest. 
C)  has 30 days following the original due date to pay estimated taxes without interest. 
D)  has 30 days following the original due date to pay estimated taxes without penalty. 
A)  still should pay the tax by the original return due date. 
B)  also extends the period in which to pay taxes without interest. 
C)  has 30 days following the original due date to pay estimated taxes without interest. 
D)  has 30 days following the original due date to pay estimated taxes without penalty.

Question 11

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

Accepted Answer

A)  2 months. 
B)  6 months. 
C)  3 months. 
D)  4 months. 
A)  2 months. 
B)  6 months. 
C)  3 months. 
D)  4 months.

Question 12

Which of the following communications between an accountant and client are privileged?
a) During the preparation of her 2018 tax return, Tammy informs her accountant that she contributed $25,000 t qualified charitable organization.
b) After filing his tax return, a client mentions to his accountant that he forgot to report a $7,000 prize that he w playing bingo. He asks how he should correct the error.
c) A client tells his accountant that he will no longer pay alimony to his ex- wife.

Accepted Answer

Only communication (b) is privileged bec

Question 13

The maximum failure to file penalty is a total of 25% of the underpayment.

Accepted Answer

A) True 
 B)False

Question 14

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 15

Identify which of the following statements is true.

Accepted Answer

A)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90- day letter). 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The 90- day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
D)  All of the above are false. 
A)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90- day letter). 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The 90- day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
D)  All of the above are false.

Question 16

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior- year return?

Accepted Answer

A)  Inform the client of the error and its tax consequences. 
B)  File an amended return for the client. 
C)  Notify the IRS of the error. 
D)  Do nothing. 
A)  Inform the client of the error and its tax consequences. 
B)  File an amended return for the client. 
C)  Notify the IRS of the error. 
D)  Do nothing.

Question 17

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 18

Kristina and Victor filed a joint return for the current year. They are in the 31% marginal tax bracket. Victor did not know that Kristina failed to report a prize valued at $16,000 that she won. She used the money to buy Victor a motorcycle. Does Victor meet the tests for relief under the innocent spouse provisions?

Accepted Answer

Probably not. Although (1) Victor and Kr

Question 19

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 20

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

Accepted Answer

A)  Head of Household 
B)  Child Tax Credit and Earned Income Tax Credit 
C)  Hope and Lifetime Learning Credit 
D)  All of the above 
A)  Head of Household 
B)  Child Tax Credit and Earned Income Tax Credit 
C)  Hope and Lifetime Learning Credit 
D)  All of the above

Identify which of the following statements is true.

Identify which of the following statements is false.

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

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

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

Identify which of the following statements is false.

Which of the following is not a reason for relief from the substantial understatement penalty?

If a return's due date is extended, a taxpayer

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

The maximum failure to file penalty is a total of 25% of the underpayment.

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?

Identify which of the following statements is true.

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior- year return?

Identify which of the following statements is true.

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 15: Administrative Procedures

Identify which of the following statements is true.

Identify which of the following statements is false.

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

Explain accountant- client privilege. What are the similarities and differences between it and attorney- client privilege?

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

Identify which of the following statements is false.

Which of the following is not a reason for relief from the substantial understatement penalty?

If a return's due date is extended, a taxpayer

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

The maximum failure to file penalty is a total of 25% of the underpayment.

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?

Identify which of the following statements is true.

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior- year return?

Identify which of the following statements is true.

A $500 penalty for each instance of failing to comply with the due diligence requirements for determining eligibility applies to which of the following?

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters