Exam 17: Tax Practice and Ethics

Cheng filed an amended return this year, claiming a refund relative to her tax computation on a prior-year's return. When the IRS approves the amended return and issues the refund, it also pays Cheng interest with respect to the overpayment.

The taxpayer must pay a significant fee to have a letter ruling issued by the IRS.

Keepert uses "two sets of books." She only reports one-half of her cash sales on the records that she uses to complete her Federal income tax return. The statute of limitations for Keepert's return is six years.

Circular 230 requires that the tax practitioner use the "best practices" of the tax profession in carrying out a tax engagement. Specify what some of these best practices entail.

Lisa, a calendar year taxpayer subject to a 33% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $160,000. The applicable overvaluation penalty is:

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

Which statement is incorrect as to the conduct of IRS income tax audits?

A privilege of ____________________ exists between a tax preparer and the client as to tax advice rendered.

The Commissioner of the IRS is appointed by the: