Question 1

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

Accepted Answer

A) True 
 B)False

Question 2

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a failure-to-file penalty?

Accepted Answer

The penalty for failure to fil

Question 3

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

Accepted Answer

A) True 
 B)False

Question 4

For the following independent situations, list who (the IRS, the taxpayer, the party who initiates the case, or both sides) has the burden of proof in most civil tax cases:
a. The tax case involves a penalty.
b. The tax case involves a trust with net worth of $8.3 million.
c. The taxpayer has credible evidence, maintains records, and cooperates with reasonable IRS requests.
d. The IRS uses statistics to reconstruct an individual's income.

Accepted Answer

a. The IRS

Question 5

Indicate the date that the statute of limitations would run out on the following situations:
a. The IRS assesses additional taxes for a 2017 tax return audit on May 5, 2019. How long does the IRS have to collect the tax?
b. On April 1, 2019, the IRS asks for and the taxpayer agrees to an additional year from April 1, 2019 to complete an audit for a 2015 tax return which was filed on March 9, 2016.
c. Jeremy reported $10,000 of worthless debt on his 2018 tax return which he filed on August 3, 2019.
d. Jenny files her 2019 tax return on February 25, 2020.
e. James omits 7 percent of his income on his 2017 tax return which he filed on July 12, 2018.

Accepted Answer

a. May 5, 2029
b. April 1, 202

Question 6

In the following independent situations, is it better to make an installment agreement with the IRS, an offer in compromise with the IRS, or ask for an extension of time to pay any taxes owed?
a. A taxpayer is unlikely to pay the tax amount they owe.
b. Using monthly payments, a taxpayer can afford to pay off the tax owed within 2 years.
c. A taxpayer can pay off their tax owed when they sell their boat which is up for sale.

Accepted Answer

a. An offer in compromise
b. I

Question 7

Janet did not file her tax return or pay her taxes for 2018 until November of 2019. She paid the following amounts to the IRS related to the late filing and payment of tax: $\begin{array}{lr}
\text { Interest } & \$ 500 \
\text { Underpayment of estimated tax penalty } & 350 \
\text { Failure-to-file and failure-to-pay penalties } & 1,700
\end{array}$ What amount of the above items may be deducted on Janet's 2019 individual income tax return? Explain.

Accepted Answer

$0. The interest is consumer i

Question 8

The IRS may issue summons for a taxpayer's bank account records.

Accepted Answer

A) True 
 B)False

Question 9

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements best describes the process of tax planning?

Accepted Answer

A) Tax planning is equivalent to tax evasion. 
B) Tax planning is the avoidance of "tax traps." 
C) Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability. 
D) Tax planning is the deferral of tax on income. 
E) Tax planning is the calculation of a taxpayer's marginal rate of tax. 
A) Tax planning is equivalent to tax evasion. 
B) Tax planning is the avoidance of "tax traps." 
C) Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability. 
D) Tax planning is the deferral of tax on income. 
E) Tax planning is the calculation of a taxpayer's marginal rate of tax.

Question 11

The statute of limitations for the deduction of a worthless security is 5 years.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following types of audits was suspended due to protests from taxpayers and lawmakers?

Accepted Answer

A) Discriminant Function System selected audit 
B) Taxpayer Compliance Measurement Program selected audit 
C) Correspondence audit 
D) Office audit 
E) None of these 
A) Discriminant Function System selected audit 
B) Taxpayer Compliance Measurement Program selected audit 
C) Correspondence audit 
D) Office audit 
E) None of these

Question 13

Which of the following is not a type of IRS audit?

Accepted Answer

A) Office audit 
B) Field audit 
C) Correspondence audit 
D) Operational audit 
E) All of these are types of IRS audits 
A) Office audit 
B) Field audit 
C) Correspondence audit 
D) Operational audit 
E) All of these are types of IRS audits

Question 14

Tax returns selected for most audits are selected by the Discriminant Function System.

Accepted Answer

A) True 
 B)False

Question 15

The tax law is administered by the Federal Trade Commission.

Accepted Answer

A) True 
 B)False

Question 16

The statute of limitations for a tax return generally is 3 years.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

Accepted Answer

A) An individual taxpayer who has a marginal tax rate of 32 percent. 
B) An individual taxpayer who has an average tax rate of 32 percent. 
C) An individual taxpayer who has a marginal tax rate of 24 percent. 
D) The taxpayers in a and b will benefit equally. 
E) None of these. 
A) An individual taxpayer who has a marginal tax rate of 32 percent. 
B) An individual taxpayer who has an average tax rate of 32 percent. 
C) An individual taxpayer who has a marginal tax rate of 24 percent. 
D) The taxpayers in a and b will benefit equally. 
E) None of these.

Question 18

The tax law contains a penalty for filing a "frivolous" tax return.

Accepted Answer

A) True 
 B)False

Question 19

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

Accepted Answer

A) True 
 B)False

Question 20

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

Accepted Answer

A) True 
 B)False

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a failure-to-file penalty?

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

The IRS may issue summons for a taxpayer's bank account records.

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Which of the following statements best describes the process of tax planning?

The statute of limitations for the deduction of a worthless security is 5 years.

Which of the following types of audits was suspended due to protests from taxpayers and lawmakers?

Which of the following is not a type of IRS audit?

Tax returns selected for most audits are selected by the Discriminant Function System.

The tax law is administered by the Federal Trade Commission.

The statute of limitations for a tax return generally is 3 years.

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

The tax law contains a penalty for filing a "frivolous" tax return.

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a failure-to-file penalty?

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

The IRS may issue summons for a taxpayer's bank account records.

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Which of the following statements best describes the process of tax planning?

The statute of limitations for the deduction of a worthless security is 5 years.

Which of the following types of audits was suspended due to protests from taxpayers and lawmakers?

Which of the following is not a type of IRS audit?

Tax returns selected for most audits are selected by the Discriminant Function System.

The tax law is administered by the Federal Trade Commission.

The statute of limitations for a tax return generally is 3 years.

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

The tax law contains a penalty for filing a "frivolous" tax return.

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Accounting Periods and Other Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters