Exam 17: Tax Practice and Ethics

Faye, a CPA, is preparing Judith's tax return. Last year, Judith's return included dividend income from the P&G Company. This year, Judith reports no such income. Faye should inquire as to whether Judith sold the P&G stock during the year.

Loren Ltd., a calendar year taxpayer, had the following transactions, all of which were properly reported on a timely filed return. Presuming the absence of fraud, how much of an omission from gross income must occur for Loren before the six-year statute of limitations applies? Show your computations. Gross receipts \ 3,500,000 Cost of sales (1,000,000) Gross profit \ 2,500,000 Capital gain \ 100,000 Capital loss (30,000) 70,000 Total income \2 ,570,000

AICPA SSTS #1 requires that a client's tax return position:

Which of the following statements correctly reflects the rules governing interest to be paid on an individual's Federal tax deficiency or claim for refund?

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

Maria and Miguel Blanco are in the midst of negotiating a divorce. Because both parties are unwilling to share any current financial information, their joint Form 1040 for 2018 is not filed until October 31, 2019, when the respective divorce attorneys forced them to cooperate. The Blancos should not be subject to any Federal late-filing penalties, because the reasonable cause exception applies to their family discord.

Lola, a calendar year taxpayer subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Redd, valuing the property at $70,000. The IRS later valued the gift at $100,000. The applicable undervaluation penalty is:

Circular 230 allows a tax preparer to:

Four Square Services Corporation estimates that its 2019 taxable income will be $1,000,000. Thus, it incurs a $210,000 liability. For the following independent cases, compute Four Square's minimum quarterly estimated tax payments that will avoid an underpayment penalty. a. For 2018, taxable income was $800,000, and tax liability was $168,000. b. For 2017, taxable income was $2 million, and tax liability was $680,000. For 2018, taxable income was $100,000, and tax liability was $21,000.

Describe the potential outcomes to a party who provides information to the IRS under the informant or whistleblower program.

An individual might be incarcerated upon a conviction for:

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

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. -Failure to sign the return.

Gadsden, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Marvin, valuing the property at $150,000. The IRS later valued the gift at $400,000. The applicable undervaluation penalty is:

If the taxpayer shows______________ for an underpayment of tax, the failure to pay penalty can be reduced or eliminated.

The National Taxpayer Advocate reports to the:

The tax preparer penalty for taking an unreasonable tax return position is the greater of $___________ or ____________of the tax professional's income from preparing the return.

The Commissioner of the IRS is appointed by the:

The IRS is a subsidiary agency of the Department of the ________.

A privilege of_____________ exists between certain types of tax preparers and the client as to tax advice rendered.