Question 1

The IRS is one of the largest Federal agencies, employing almost people throughout the year.

Accepted Answer

75,000

Question 2

In the case of bad debts and worthless securities, the statute of limitations on claims for refund is three years.

Accepted Answer

A) True 
 B)False  False

Question 3

During any month in which both the failure-to-file and failure-to-pay penalties apply, both penalties are paid in full.

Accepted Answer

A) True 
 B)False  False

Question 4

A CPA can take a tax return position for a client that is contrary to current IRS interpretations of the law.

Accepted Answer

A) True 
 B)False

Question 5

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

Accepted Answer

A)  Financial accounting tax accrual workpapers. 
B)  A tax research memo used to support a tax planning idea. 
C)  Building a defense against a penalty assessed for the use of a tax shelter. 
D)  Building a defense against a charge brought by the SEC. 
A)  Financial accounting tax accrual workpapers. 
B)  A tax research memo used to support a tax planning idea. 
C)  Building a defense against a penalty assessed for the use of a tax shelter. 
D)  Building a defense against a charge brought by the SEC.

Question 6

A taxpayer penalty may be waived if there is shown to be reasonable cause for the misstatement on the tax return.
The courts have applied this standard strictly. List three or more assertions for a waiver of a taxpayer penalty that courts have found not to constitute reasonable cause. Example: Ignorance of the tax law.

Accepted Answer

Courts have found the following taxpayer

Question 7

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used.
-Negligence in filing a return.

Accepted Answer

A) Ignorance of the tax law 
B) Reasonable basis 
C) Reasonable cause 
D) Complexity of the tax law 
E) Substantial authority
F)Disclosure on return 
A) Ignorance of the tax law 
B) Reasonable basis 
C) Reasonable cause 
D) Complexity of the tax law 
E) Substantial authority
F)Disclosure on return

Question 8

The Statements on Standards for Tax Services (SSTS) apply to members of the AICPA, a state bar association, and all enrolled agents.

Accepted Answer

A) True 
 B)False

Question 9

Young-Eagle files her 2018 Form 1040 on July 1, 2019. The Federal tax statute of limitations for this return expires on:

Accepted Answer

A)  April 15, 2022. 
B)  July 1, 2022. 
C)  July 1, 2026. 
D)  Never for a late-filed return. 
A)  April 15, 2022. 
B)  July 1, 2022. 
C)  July 1, 2026. 
D)  Never for a late-filed return.

Question 10

An individual is not subject to an underpayment penalty until more than $ is due and unpaid through estimated taxes.

Accepted Answer

The answer of An individual is not subject to an...

Question 11

After the completion of an audit, the taxpayer has 90 days to petition the Court to modify the proposed tax due.

Accepted Answer

The answer of After the completion of an audit, the...

Question 12

Some taxpayers must make quarterly estimated payments of their income tax. Describe these requirements. In your answer, include both corporate and noncorporate taxpayers.

Accepted Answer

C corporations must make estimates when

Question 13

Which of the following is subject to tax return preparer penalties?

Accepted Answer

A)  Meredith is the director of Federal taxes for a C corporation. 
B)  Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program. 
C)  Abbie prepares her mother's tax returns for $50 a year. A CPA, Abbie would charge a client $750 for completing a similar return. 
D)  Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies. 
A)  Meredith is the director of Federal taxes for a C corporation. 
B)  Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program. 
C)  Abbie prepares her mother's tax returns for $50 a year. A CPA, Abbie would charge a client $750 for completing a similar return. 
D)  Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies.

Question 14

An IRS letter ruling might determine that an employee's compensation is unreasonable in amount.

Accepted Answer

A) True 
 B)False

Question 15

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used.
-Filing an improper refund claim.

Accepted Answer

A) Ignorance of the tax law 
B) Reasonable basis 
C) Reasonable cause 
D) Complexity of the tax law 
E) Substantial authority
F)Disclosure on return 
A) Ignorance of the tax law 
B) Reasonable basis 
C) Reasonable cause 
D) Complexity of the tax law 
E) Substantial authority
F)Disclosure on return

Question 16

Fiona, a VITA volunteer for her college's tax clinic, is not a tax preparer as defined by the Code. Thus, Fiona is exempted from the Code's tax preparer penalties.

Accepted Answer

A) True 
 B)False

Question 17

Specific factors that are used in selecting tax returns for audit and the weights for such factors are not released to the public. Summarize the public information about tax audit selection; how might a tax return's chances of audit increase above national norms?

Accepted Answer

These circumstances likely increase one'

Question 18

CPA Norma and her client Colin hold a privilege of confidentiality from the IRS as to their tax planning discussions about completing Colin's tax returns. The IRS cannot successfully subpoena records concerning these discussions.

Accepted Answer

A) True 
 B)False

Question 19

An individual who claims a deduction for qualified business income under § 199A:

Accepted Answer

A)  Is more likely to have a penalty imposed for an error on the return than someone who does not claim this deduction. 
B)  Is less likely to have a penalty imposed for an error on the return than someone who does not claim this deduction. 
C)  Is just as likely to have a penalty imposed as any other individual with an error on the return. 
D)  None of these. 
A)  Is more likely to have a penalty imposed for an error on the return than someone who does not claim this deduction. 
B)  Is less likely to have a penalty imposed for an error on the return than someone who does not claim this deduction. 
C)  Is just as likely to have a penalty imposed as any other individual with an error on the return. 
D)  None of these.

Question 20

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as
_________________________.

Accepted Answer

The answer of The Treasury document regulating the professional conduct...

Exam 26: Tax Practice and Ethics

The IRS is one of the largest Federal agencies, employing almost people throughout the year.

In the case of bad debts and worthless securities, the statute of limitations on claims for refund is three years.

During any month in which both the failure-to-file and failure-to-pay penalties apply, both penalties are paid in full.

A CPA can take a tax return position for a client that is contrary to current IRS interpretations of the law.

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used. -Negligence in filing a return.

The Statements on Standards for Tax Services (SSTS) apply to members of the AICPA, a state bar association, and all enrolled agents.

Young-Eagle files her 2018 Form 1040 on July 1, 2019. The Federal tax statute of limitations for this return expires on:

An individual is not subject to an underpayment penalty until more than $ is due and unpaid through estimated taxes.

After the completion of an audit, the taxpayer has 90 days to petition the Court to modify the proposed tax due.

Some taxpayers must make quarterly estimated payments of their income tax. Describe these requirements. In your answer, include both corporate and noncorporate taxpayers.

Which of the following is subject to tax return preparer penalties?

An IRS letter ruling might determine that an employee's compensation is unreasonable in amount.

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used. -Filing an improper refund claim.

Fiona, a VITA volunteer for her college's tax clinic, is not a tax preparer as defined by the Code. Thus, Fiona is exempted from the Code's tax preparer penalties.

Specific factors that are used in selecting tax returns for audit and the weights for such factors are not released to the public. Summarize the public information about tax audit selection; how might a tax return's chances of audit increase above national norms?

CPA Norma and her client Colin hold a privilege of confidentiality from the IRS as to their tax planning discussions about completing Colin's tax returns. The IRS cannot successfully subpoena records concerning these discussions.

An individual who claims a deduction for qualified business income under § 199A:

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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