Question 1

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Accepted Answer

A) True 
 B)False

Question 2

On August 13 of the following year, Joy files her current calendar-year tax return and pays the amount due without having requested an extension. The tax shown on her return is $25,000. Her current-year withholding tax is $15,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Will Joy owe interest, and if so, on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr

Question 3

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

Accepted Answer

a)The civil fraud penalty is $

Question 4

Identify which of the following statements is true.

Accepted Answer

A) If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B) A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C) The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D) All of the above are true. 
A) If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B) A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C) The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D) All of the above are true.

Question 5

Paul's tax liability for last year was $30,000. Paul projects that his tax for this year will be $40,000. Paul is self-employed and, thus, will have no withholding. His AGI for last year did not exceed $150,000. How much estimated tax should Paul pay for this year to avoid the penalty for underpayment of estimated taxes?

Accepted Answer

Because Paul's AGI for last ye

Question 6

Christie and Billy jointly file this year. Billy intentionally omits $5,000 in gambling winnings. Christie fraudulently deducts $1,000 in business expenses. The IRS audits the return, assesses a $2,500 deficiency and begins collection efforts two years after the timely filing of the return. Christie and Billy divorced one year before the deficiency was assessed. Can Christie receive any tax relief from the full $2,500 deficiency?

Accepted Answer

Yes, under the proportional liability el

Question 7

The innocent spouse relief provision from tax liability covers all of the following except

Accepted Answer

A) improper deductions. 
B) improper credits. 
C) improper basis. 
D) All are understatements subject to minimum thresholds. 
A) improper deductions. 
B) improper credits. 
C) improper basis. 
D) All are understatements subject to minimum thresholds.

Question 8

Identify which of the following statements is false.

Accepted Answer

A) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B) If the taxpayer being audited does not concur with the proposed assessment, the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C) During the audit process, if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax), then the taxpayer is precluded from filing a refund suit. 
D) Interest on a deficiency accrues from the due date of the return through the payment date. 
A) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B) If the taxpayer being audited does not concur with the proposed assessment, the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C) During the audit process, if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax), then the taxpayer is precluded from filing a refund suit. 
D) Interest on a deficiency accrues from the due date of the return through the payment date.

Question 9

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

Accepted Answer

A) TCMP. 
B) DIF program. 
C) instant audit program. 
D) 1040 program. 
A) TCMP. 
B) DIF program. 
C) instant audit program. 
D) 1040 program.

Question 10

In which of the situations below will a taxpayer not be assessed interest on the tax remitted?

Accepted Answer

A) An extension is obtained and the tax is paid within the extension period. 
B) A timely return is filed but the taxpayer must delay payment of the taxes. 
C) The return is audited and additional tax is owed. 
D) None of the above situations. 
A) An extension is obtained and the tax is paid within the extension period. 
B) A timely return is filed but the taxpayer must delay payment of the taxes. 
C) The return is audited and additional tax is owed. 
D) None of the above situations.

Question 11

The taxes shown on Kate's tax returns for 2017 and 2018 were $6,000 and $9,000, respectively. Kate's withholding tax for 2018 was $7,000 and she paid no estimated taxes. Kate filed her 2018 return on April 3, 2019, but she did not have sufficient funds to pay the balance due. She pays the $2,000 balance due on June 19, 2019. Kate's AGI for 2018 did not exceed $150,000. Calculate the penalties Kate owes on her 2018 tax return.

Accepted Answer

Kate's 2018 AGI did not exceed $150,000.

Question 12

Pete has reported a tax liability of $3,500 on his two years ago. Last year his withholding was $3,800. He did not last year's return until June of this year. What penalties does Pete owe?

Accepted Answer

Pete owes no penalty for failu

Question 13

On July 25 of the following year, Joy files her current calendar-year tax return. She had requested extensions as required. On October 8, she pays the amount due. The tax shown on her return is $22,000. Her current-year withholding tax is $21,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Calculate the penalties that the IRS is likely to assess. Ignore the penalty for underpayment of estimated taxes. Assume she did not commit fraud.

Accepted Answer

If Joy requests an extension, the failur

Question 14

On August 13 of the following year, Joy files her current calendar-year tax return and pays the amount due without having requested an extension. The tax shown on her return is $25,000. Her current-year withholding tax is $15,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Calculate the penalties that the IRS is likely to assess. Ignore the penalty for underpayment of estimated taxes. Assume she did not commit fraud.

Accepted Answer

The answer of On August 13 of the following year,...

Question 15

Identify which of the following statements is false.

Accepted Answer

A) The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B) Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C) A corporation must file a tax return even if it has no gross income. 
D) Extensions of time for filing tax returns may be obtained. 
A) The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B) Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C) A corporation must file a tax return even if it has no gross income. 
D) Extensions of time for filing tax returns may be obtained.

Question 16

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

Accepted Answer

A) $700 
B) $1,400 
C) $5,600 
D) $1,750 
A) $700 
B) $1,400 
C) $5,600 
D) $1,750

Question 17

A six-year statute of limitation rule applies if the taxpayer

Accepted Answer

A) understates taxable income by 25%. 
B) understates AGI by 25%. 
C) understates gross income by 25%. 
D) none of the above 
A) understates taxable income by 25%. 
B) understates AGI by 25%. 
C) understates gross income by 25%. 
D) none of the above

Question 18

Which one of the following statements about letter rulings is false?

Accepted Answer

A) If a taxpayer requests and pays for a ruling, the IRS must respond to his request by issuing a ruling. 
B) A ruling is a response to a taxpayer's specific set of facts. 
C) Rulings become public information. 
D) The IRS issues revenue procedures periodically, which prescribe the information that must be supplied with a ruling request. 
A) If a taxpayer requests and pays for a ruling, the IRS must respond to his request by issuing a ruling. 
B) A ruling is a response to a taxpayer's specific set of facts. 
C) Rulings become public information. 
D) The IRS issues revenue procedures periodically, which prescribe the information that must be supplied with a ruling request.

Question 19

Explain one of the two exceptions to imposing interest from the original due date of the tax return until the date the tax deficiency is paid.

Accepted Answer

If the IRS fails to send an individual t

Question 20

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior-year return?

Accepted Answer

A) Notify the IRS of the error. 
B) Inform the client of the error and its tax consequences. 
C) File an amended return for the client. 
D) Do nothing. 
A) Notify the IRS of the error. 
B) Inform the client of the error and its tax consequences. 
C) File an amended return for the client. 
D) Do nothing.

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

Identify which of the following statements is true.

The innocent spouse relief provision from tax liability covers all of the following except

Identify which of the following statements is false.

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

In which of the situations below will a taxpayer not be assessed interest on the tax remitted?

Pete has reported a tax liability of $3,500 on his two years ago. Last year his withholding was $3,800. He did not last year's return until June of this year. What penalties does Pete owe?

Identify which of the following statements is false.

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

A six-year statute of limitation rule applies if the taxpayer

Which one of the following statements about letter rulings is false?

Explain one of the two exceptions to imposing interest from the original due date of the tax return until the date the tax deficiency is paid.

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior-year return?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Us Taxation of Foreign-Related Transactions

Filters

Exam 15: Administrative Procedures

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

Pablo, a bachelor, owes $80,000 of additional taxes, all due to fraud. What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec. 7201?

Identify which of the following statements is true.

The innocent spouse relief provision from tax liability covers all of the following except

Identify which of the following statements is false.

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

In which of the situations below will a taxpayer not be assessed interest on the tax remitted?

Pete has reported a tax liability of $3,500 on his two years ago. Last year his withholding was $3,800. He did not last year's return until June of this year. What penalties does Pete owe?

Identify which of the following statements is false.

A taxpayer's return is audited and additional taxes are assessed. The IRS also asserts that a negligence penalty should be assessed. The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence. What is the amount of the penalty for negligence?

A six-year statute of limitation rule applies if the taxpayer

Which one of the following statements about letter rulings is false?

Explain one of the two exceptions to imposing interest from the original due date of the tax return until the date the tax deficiency is paid.

According to Circular 230, what should a CPA do upon discovery of an error in a client's prior-year return?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Us Taxation of Foreign-Related Transactions

Filters