Question 1

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Accepted Answer

A) True 
 B)False

Question 2

Ramon's tax return was randomly selected for audit.Which IRS program likely selected Ramon's return for audit?

Accepted Answer

A) DIF system. 
B) National Research Program. 
C) Document perfection. 
D) Information matching. 
E) None of the choices are correct. 
A) DIF system. 
B) National Research Program. 
C) Document perfection. 
D) Information matching. 
E) None of the choices are correct.

Question 3

Office examinations are the most common type of IRS audit.

Accepted Answer

A) True 
 B)False

Question 4

According to Statements on Standards for Tax Services No.1,a tax practitioner can recommend a tax return position:

Accepted Answer

A) if the position is frivolous and disclosed on the tax return. 
B) if the position complies with the standards imposed by the applicable tax authority. 
C) only if the position meets the "more likely than not" standard. 
D) only if the position meets the "clear and convincing evidence" standard. 
E) None of the choices are correct. 
A) if the position is frivolous and disclosed on the tax return. 
B) if the position complies with the standards imposed by the applicable tax authority. 
C) only if the position meets the "more likely than not" standard. 
D) only if the position meets the "clear and convincing evidence" standard. 
E) None of the choices are correct.

Question 5

For the following tax returns,identify which of the three audit types will most likely be utilized.
a.The IRS selected Don's return for audit because of his high itemized deductions.The IRS would like documentation of these deductions.
b.Large Public Corporation is a very large publicly traded corporation.It is involved in many complex transactions that have significant tax ramifications.
c.George and Barbara operate a small business out of their home.The IRS has identified a couple of issues that may relate to their business.
d.The IRS selected Bill and Hillary's tax return for review because of some of their investment sales.They would like a better understanding of the transactions and parties involved.

Accepted Answer

(a)Correspondence examination

Question 6

Revenue rulings and revenue procedures are examples of primary authorities.

Accepted Answer

A) True 
 B)False

Question 7

Lavonda discovered that the U.S.Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS.Lavonda should choose which of the following trial courts to hear her case:

Accepted Answer

A) Tax Court only. 
B) U)S.Court of Federal Claims only. 
C) U)S.District Court only. 
D) Tax Court or the U.S.District Court. 
E) Tax Court or the U.S.Court of Federal Claims. 
A) Tax Court only. 
B) U)S.Court of Federal Claims only. 
C) U)S.District Court only. 
D) Tax Court or the U.S.District Court. 
E) Tax Court or the U.S.Court of Federal Claims.

Question 8

As required by the Constitution,all tax bills are supposed to originate in the House of Representatives.

Accepted Answer

A) True 
 B)False

Question 9

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

Accepted Answer

A) True 
 B)False

Question 10

A client has recently learned of a proposed tax bill that would increase the tax rates on investment gains by 5 percent.The president does not support this increase.Please describe for your client the process by which new tax legislation is created and how the president's disapproval may influence the enactment of the bill.

Accepted Answer

As required by the U.S.Constitution (Art

Question 11

Of the two basic types of tax services,beginning tax researchers often prefer topical tax services.

Accepted Answer

A) True 
 B)False

Question 12

In researching a tax issue,Eric finds that the U.S.Circuit Court of Appeals for the Federal Circuit previously has ruled in favor of his tax position,whereas the 11th Circuit (Eric's circuit)previously has ruled against his tax position.If Eric is contemplating litigating his tax position with the IRS,he should prefer to have his case first tried by the U.S.Tax Court.

Accepted Answer

A) True 
 B)False

Question 13

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Accepted Answer

A) True 
 B)False

Question 14

Lakeisha,a first-year staff accountant,was researching a tax issue and found what appears to be the answer to her question in her introductory tax textbook that she bought three years ago.She is thrilled because she thought it would take much longer to find her answer.What type of authority is the textbook? What are other examples of this type of authority? Can Lakeisha base her research conclusion on the textbook or similar authorities? Any suggestions for Lakeisha?

Accepted Answer

There are two broad categories of tax au

Question 15

Kodak is a beginning tax researcher.He knows that the first step of the research process is to get an understanding of the facts surrounding the transaction being researched.Describe the two basic types of facts,the sources of facts for a research project,and any advice that may help Kodak.

Accepted Answer

To answer a tax question,you must unders

Question 16

Basu received a letter from the IRS that gave him the choice of (1)paying a proposed deficiency or (2)filing a petition with the U.S.Tax Court.Basu received the:

Accepted Answer

A) 30-day letter. 
B) 90-day letter. 
C) Appeals letter. 
D) Tax adjustment letter. 
E) None of the choices are correct. 
A) 30-day letter. 
B) 90-day letter. 
C) Appeals letter. 
D) Tax adjustment letter. 
E) None of the choices are correct.

Question 17

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Accepted Answer

A) True 
 B)False

Question 18

Leslie made a mathematical mistake in computing her tax liability.Which audit program will likely catch Leslie's mistake?

Accepted Answer

A) DIF system. 
B) Mathematical correction. 
C) Document perfection. 
D) Information matching. 
E) None of the choices are correct. 
A) DIF system. 
B) Mathematical correction. 
C) Document perfection. 
D) Information matching. 
E) None of the choices are correct.

Question 19

Martin has never filed a 2019 tax return despite earning approximately $30,000 providing landscaping work in the community.In what tax year,will the statute of limitations expire for Martin's 2019 tax return?

Accepted Answer

A) 2022. 
B) 2023. 
C) 2026. 
D) 2027. 
E) None of the choices are correct. 
A) 2022. 
B) 2023. 
C) 2026. 
D) 2027. 
E) None of the choices are correct.

Question 20

Jaime recently found a "favorable" trial-level court opinion directly on point for her tax question.Which trial-level court would she prefer to have issued the opinion?

Accepted Answer

A) Tax Court. 
B) District Court. 
C) Circuit Court. 
D) Divorce Court. 
E) None of the choices are correct. 
A) Tax Court. 
B) District Court. 
C) Circuit Court. 
D) Divorce Court. 
E) None of the choices are correct.

Exam 2: Tax Compliance,the Irs,and Tax Authorities

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Ramon's tax return was randomly selected for audit.Which IRS program likely selected Ramon's return for audit?

Office examinations are the most common type of IRS audit.

According to Statements on Standards for Tax Services No.1,a tax practitioner can recommend a tax return position:

Revenue rulings and revenue procedures are examples of primary authorities.

Lavonda discovered that the U.S.Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS.Lavonda should choose which of the following trial courts to hear her case:

As required by the Constitution,all tax bills are supposed to originate in the House of Representatives.

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

Of the two basic types of tax services,beginning tax researchers often prefer topical tax services.

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Kodak is a beginning tax researcher.He knows that the first step of the research process is to get an understanding of the facts surrounding the transaction being researched.Describe the two basic types of facts,the sources of facts for a research project,and any advice that may help Kodak.

Basu received a letter from the IRS that gave him the choice of (1)paying a proposed deficiency or (2)filing a petition with the U.S.Tax Court.Basu received the:

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Leslie made a mathematical mistake in computing her tax liability.Which audit program will likely catch Leslie's mistake?

Martin has never filed a 2019 tax return despite earning approximately $30,000 providing landscaping work in the community.In what tax year,will the statute of limitations expire for Martin's 2019 tax return?

Jaime recently found a "favorable" trial-level court opinion directly on point for her tax question.Which trial-level court would she prefer to have issued the opinion?

An Introduction to Tax

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters