Question 1

Identify which of the following statements is true.

Accepted Answer

A) Form 870-AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
B) Signing of Form 870-AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
C) The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 10 days of the date of the 30-day letter. 
D) All of the above are false. 
A) Form 870-AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
B) Signing of Form 870-AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
C) The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 10 days of the date of the 30-day letter. 
D) All of the above are false.

Question 2

Identify which of the following statements is false.

Accepted Answer

A) In general, the taxpayer has the burden of proof in Tax Court cases. However, the IRS has the burden of proof for issues raised after the issuance of the 90-day letter. 
B) A taxpayer may want to avoid using the Tax Court to litigate an issue because decisions from this court cannot be appealed. 
C) The Tax Court can be used to litigate a tax issue without first paying the tax assessment. 
D) In order to litigate in the Tax Court, a petition must be filed within 90 days of the issuance of a notice of deficiency. 
A) In general, the taxpayer has the burden of proof in Tax Court cases. However, the IRS has the burden of proof for issues raised after the issuance of the 90-day letter. 
B) A taxpayer may want to avoid using the Tax Court to litigate an issue because decisions from this court cannot be appealed. 
C) The Tax Court can be used to litigate a tax issue without first paying the tax assessment. 
D) In order to litigate in the Tax Court, a petition must be filed within 90 days of the issuance of a notice of deficiency.

Question 3

The IRS provides advice concerning an issue that arises during an audit by issuing

Accepted Answer

A) a revenue ruling. 
B) an audit memorandum. 
C) a technical advice memorandum. 
D) a private letter ruling. 
A) a revenue ruling. 
B) an audit memorandum. 
C) a technical advice memorandum. 
D) a private letter ruling.

Question 4

Which of the following statements regarding Circular 230 is false?

Accepted Answer

A) Circular 230 applies to all tax return preparers. 
B) Circular 230 defines practice before the IRS. 
C) Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D) Circular 230 applies to CPAs, enrolled agents, enrolled actuaries, and attorneys. 
A) Circular 230 applies to all tax return preparers. 
B) Circular 230 defines practice before the IRS. 
C) Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D) Circular 230 applies to CPAs, enrolled agents, enrolled actuaries, and attorneys.

Question 5

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

Accepted Answer

A) True 
 B)False

Question 6

Latka Novatny gave you the following information to use in the preparation of his current year's tax return:   In addition, he received $40,000 from a relative for whom he had worked previously. You have researched whether the $40,000 should be classified as a gift or compensation and are confident that substantial authority exists for classifying it as a gift. What tax compliance issues should you consider in deciding whether to report or exclude the $40,000?

Accepted Answer

• Will Latka be liable for a penalty if

Question 7

The "automatic" extension period for filing an individual return is seven months.

Accepted Answer

A) True 
 B)False

Question 8

One of your corporate clients has recently filed for bankruptcy. In the course of the proceedings, you (a)prepare a plan of reorganization that alters the rights of preferred stockholders, (b)notify the company's creditors of an impending bulk transfer of the company's assets, (c)review IRS secured claims against these assets, (d)restructure the company's debt by reducing its principal amount and extending its maturity, and (e)advise the bankruptcy court as to how this restructuring will impact the company's NOLs. Which of these activities, if any, constitutes the unauthorized practice of law?

Accepted Answer

Activities (a), (b), and (c)constitute t

Question 9

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

Accepted Answer

A) 2 months. 
B) 3 months. 
C) 4 months. 
D) 6 months. 
A) 2 months. 
B) 3 months. 
C) 4 months. 
D) 6 months.

Question 10

In order to appeal to the Appeals Division, a taxpayer must submit a protest letter to the IRS

Accepted Answer

A) if an office audit is involved. 
B) as a response to receiving a 30-day letter. 
C) in a field audit involving an assessment of taxes, interest, and penalties in excess of $25,000. 
D) if a TCMP audit is involved. 
A) if an office audit is involved. 
B) as a response to receiving a 30-day letter. 
C) in a field audit involving an assessment of taxes, interest, and penalties in excess of $25,000. 
D) if a TCMP audit is involved.

Question 11

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

Accepted Answer

A) $0. 
B) $40. 
C) $80. 
D) $120. 
A) $0. 
B) $40. 
C) $80. 
D) $120.

Question 12

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Accepted Answer

A) True 
 B)False

Question 13

Identify which of the following statements is true.

Accepted Answer

A) 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 six years after the date on which the return is filed. 
B) The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
C) If a taxpayer omits from gross income an amount in excess of 25% of the gross income shown on his return, the statute of limitations is five years. 
D) All of the above are true. 
A) 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 six years after the date on which the return is filed. 
B) The statute of limitations limits the time during which a taxpayer may claim a refund of an overpayment of tax. 
C) If a taxpayer omits from gross income an amount in excess of 25% of the gross income shown on his return, the statute of limitations is five years. 
D) All of the above are true.

Question 14

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Accepted Answer

The IRS is organized functionally into f

Question 15

Kristina and Victor filed a joint return for the current year. They are in the 31% marginal tax bracket. Victor did not know that Kristina failed to report a prize valued at $16,000 that she won. She used the money to buy Victor a motorcycle. Does Victor meet the tests for relief under the innocent spouse provisions?

Accepted Answer

Probably not. Although (1)Victor and Kri

Question 16

Tax return preparers can be penalized for the following activities except

Accepted Answer

A) failure to sign a return. 
B) failure to give a copy of the return to the taxpayer. 
C) failure to maintain IRS continuing education requirements. 
D) failure to provide the preparer's identification number on the return. 
A) failure to sign a return. 
B) failure to give a copy of the return to the taxpayer. 
C) failure to maintain IRS continuing education requirements. 
D) failure to provide the preparer's identification number on the return.

Question 17

The statute of limitations is unlimited for a tax return that is never filed.

Accepted Answer

A) True 
 B)False

Question 18

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Accepted Answer

A) $0. 
B) $75. 
C) $375. 
D) $450. 
A) $0. 
B) $75. 
C) $375. 
D) $450.

Question 19

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

Accepted Answer

A) True 
 B)False

Question 20

Identify which of the following statements is false.

Accepted Answer

A) Appeals officers usually have the operating authority to settle disputes with taxpayers based on the "hazards of litigation." 
B) When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle with the taxpayer based on the "hazards of litigation." 
C) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
D) If the taxpayer and the appeals officer fail to reach agreement, the IRS issues a 90-day letter. 
A) Appeals officers usually have the operating authority to settle disputes with taxpayers based on the "hazards of litigation." 
B) When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle with the taxpayer based on the "hazards of litigation." 
C) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
D) If the taxpayer and the appeals officer fail to reach agreement, the IRS issues a 90-day letter.

Identify which of the following statements is true.

Identify which of the following statements is false.

The IRS provides advice concerning an issue that arises during an audit by issuing

Which of the following statements regarding Circular 230 is false?

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

The "automatic" extension period for filing an individual return is seven months.

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

In order to appeal to the Appeals Division, a taxpayer must submit a protest letter to the IRS

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Identify which of the following statements is true.

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Tax return preparers can be penalized for the following activities except

The statute of limitations is unlimited for a tax return that is never filed.

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

Identify which of the following statements is false.

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

Identify which of the following statements is true.

Identify which of the following statements is false.

The IRS provides advice concerning an issue that arises during an audit by issuing

Which of the following statements regarding Circular 230 is false?

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

The "automatic" extension period for filing an individual return is seven months.

An automatic extension of time from the regular filing date for an individual tax return may be received, without giving the IRS a reason, for

In order to appeal to the Appeals Division, a taxpayer must submit a protest letter to the IRS

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $800 of tax. The late filing penalty is

If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.

Identify which of the following statements is true.

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Tax return preparers can be penalized for the following activities except

The statute of limitations is unlimited for a tax return that is never filed.

A calendar-year individual taxpayer files last year's income tax return on October 17 of the current year. No extension was requested, and there is not a reasonable cause for the late filing. The return shows a balance due of $1,500 of tax. The late filing penalty is

Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS.

Identify which of the following statements is false.

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