Exam 15: Administrative Procedures

Which of the following communications between an accountant and client are not privileged? a)An accountant orally communicates to his client that he should set up a foreign subsidiary to shift taxable income to a lower tax jurisdiction. b)An accountant privately submits to the client a plan for shifting taxable income to a lower tax jurisdiction. c)During a meeting in which a client is asking for advice relating to criminal fraud, the client tells his accountant that he lied to the IRS.

Identify which of the following statements is true.

Terry files his return on March 31. The return shows taxes of $6,000, and Terry pays this entire amount when he files his return. By what time must he file a claim of refund?

A taxpayer will receive a 30-day letter

The statute of limitations, which stipulates the time frame within which either the government or the taxpayer may request a redetermination of tax due, usually expires 6 years after the date on which the return is filed.

Richard recently won a popular television reality show and its one million dollar prize. However, he omitted the prize money from his tax return for the year. What penalties can the IRS assess?

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

Billy, a calendar-year taxpayer, files his current year individual tax return on August 17 of the following year without having requested an extension. His return reports an amount due of $5,000. Billy pays this amount on November 23 of the following year. What are Billy's penalties for his failure to file and his failure to pay his tax on time? Assume Billy did not commit fraud.

Identify which of the following statements is true.

Identify which of the following statements is true.

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

Gerald requests an extension for filing his last year's individual income tax return. His tax liability is $10,000, of which $8,000 was withheld, leaving a balance due of $2,000 when he files on August 1 of the current year. His penalty for failure to pay the tax on time is

Steve files his return on April 1 and pays the entire amount of tax for the year at that time, $5,000. He is audited and pays the deficiency of $1,500 two years later. The maximum amount Steve may file a claim for refund for eighteen months later is

Explain accountant-client privilege. What are the similarities and differences between it and attorney-client privilege?

The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

Identify which of the following statements is true.

Identify which of the following statements is false.

Which, if any, of the following could result in penalties against an income tax return preparer? I. Knowing or reckless disclosure or use of tax information obtained in preparing a return. II) A willful attempt to understate any client's tax liability on a return or claim for a refund.

Which of the following items can be omitted from a taxpayer's request for a ruling?

One of your corporate clients comes to you asking for advice regarding a proposed merger with XYZ Company. You (a)issue an opinion concerning the FMV of XYZ, (b)prepare pro forma financials for the merged entity to be, (c)draft shareholder resolutions for your client approving the proposed merger, (d)file a shareholder proxy statement with the U.S. Securities and Exchange Commission, and (e)advise your client's board of directors concerning the advantages of a Type A versus a Type B reorganization. Which of these activities, if any, constitutes the unauthorized practice of law?