Question 1

Identify which of the following statements is false.

Accepted Answer

A) Interest is imposed on any tax not paid by the due date of the return (determined without regard to extensions). 
B) Interest is charged on underpayments, or paid on overpayments, at a rate of three percentage points higher than the federal short-term rate. 
C) Interest on underpayments is calculated using daily compounding and covers a time period from the original due date of the return until the date of payment. 
D) Any tax not paid by the due date for the return is subject to an interest charge. 
A) Interest is imposed on any tax not paid by the due date of the return (determined without regard to extensions). 
B) Interest is charged on underpayments, or paid on overpayments, at a rate of three percentage points higher than the federal short-term rate. 
C) Interest on underpayments is calculated using daily compounding and covers a time period from the original due date of the return until the date of payment. 
D) Any tax not paid by the due date for the return is subject to an interest charge.

Question 2

A substantial understatement of tax liability involves which of the following?

Accepted Answer

A) understatement of tax exceeding the greater of 10% of tax required to be shown on the return or $5,000 for individuals 
B) underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
C) underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
D) $10,000 or more difference between the amount shown on the return and the correct amount due 
A) understatement of tax exceeding the greater of 10% of tax required to be shown on the return or $5,000 for individuals 
B) underpayment of tax exceeding the greater of 15% of the tax required to be shown on the return or $5,000 for individuals 
C) underpayment of tax exceeding the lesser of 25% of the tax required to be shown on the return or $5,000 for individuals 
D) $10,000 or more difference between the amount shown on the return and the correct amount due

Question 3

The IRS will issue a ruling

Accepted Answer

A) on prospective transactions only. 
B) only if regulations have been issued on the subject. 
C) on a completed transaction for which a return has been filed. 
D) to clarify the tax treatment of a transaction. 
A) on prospective transactions only. 
B) only if regulations have been issued on the subject. 
C) on a completed transaction for which a return has been filed. 
D) to clarify the tax treatment of a transaction.

Question 4

Identify which of the following statements is false.

Accepted Answer

A) In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
B) The failure-to-file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month)with a maximum additional penalty of 25%. 
C) The failure-to-pay penalty is imposed at a rate of 5% per month (or fraction of a month)with a maximum penalty of 25%. 
D) A different interest rate is charged to corporate and noncorporate taxpayers. 
A) In addition to interest, taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return. 
B) The failure-to-file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month)with a maximum additional penalty of 25%. 
C) The failure-to-pay penalty is imposed at a rate of 5% per month (or fraction of a month)with a maximum penalty of 25%. 
D) A different interest rate is charged to corporate and noncorporate taxpayers.

Question 5

A taxpayer can automatically escape the penalty for underpayment of taxes by

Accepted Answer

A) owing less than $1,000 in taxes over and above the taxes withheld from wages. 
B) owing taxes in the previous year. 
C) having a casualty loss. 
D) none of the above 
A) owing less than $1,000 in taxes over and above the taxes withheld from wages. 
B) owing taxes in the previous year. 
C) having a casualty loss. 
D) none of the above

Question 6

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

Accepted Answer

Regulation of tax return preparers occur

Question 7

A letter ruling is a written determination that interprets and applies the tax laws to the taxpayer's specific set of facts.

Accepted Answer

A) True 
 B)False

Question 8

Identify which of the following statements is false.

Accepted Answer

A) So-called private letter rulings are made public after confidential information is eliminated. 
B) A letter ruling is a written statement issued to a taxpayer by the IRS that interprets and applies the tax laws to that taxpayer's specific set of facts. 
C) Only the taxpayer can appeal the decision of a court of original jurisdiction to the next higher court. 
D) If the Supreme Court decides to hear a case, it grants certiorari. 
A) So-called private letter rulings are made public after confidential information is eliminated. 
B) A letter ruling is a written statement issued to a taxpayer by the IRS that interprets and applies the tax laws to that taxpayer's specific set of facts. 
C) Only the taxpayer can appeal the decision of a court of original jurisdiction to the next higher court. 
D) If the Supreme Court decides to hear a case, it grants certiorari.

Question 9

Identify which of the following statements is true.

Accepted Answer

A) The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
B) The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C) Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
D) All of the above are false. 
A) The "innocent spouse provision," if applicable, relieves both spouses from an assessment of tax caused by a spouse's understating income or gain and/or overstating deductions, losses, or credits. 
B) The IRS is precluded from assessing any residual tax liability against transferees and fiduciaries because the initial filers are responsible for meeting the tax payments in a timely fashion. 
C) Treasury Department Circular 230 regulates the practice of attorneys, CPAs, enrolled agents, and enrolled actuaries before the IRS. 
D) All of the above are false.

Question 10

Which of the following is not a reason for relief from the substantial understatement penalty?

Accepted Answer

A) disclosure of the relevant facts pertaining to the questionable tax return position 
B) substantial authority for the tax return position 
C) reliance on a tax return preparer 
D) reasonable cause and a good faith effort to comply with the tax law 
A) disclosure of the relevant facts pertaining to the questionable tax return position 
B) substantial authority for the tax return position 
C) reliance on a tax return preparer 
D) reasonable cause and a good faith effort to comply with the tax law

Question 11

On April 15, 2018, a married couple filed their joint 2017 tax return showing gross income of $120,000. Their return was prepared by a professional tax preparer who mistakenly omitted $45,000 of income, which the preparer in good faith considered to be nontaxable. No information with regard to this omitted income was disclosed on the return or attached statements. By what date must the IRS assert a notice of deficiency before the statute of limitations expires?

Accepted Answer

A) April 15, 2024 
B) December 31, 2018 
C) April 15, 2021 
D) December 31, 2024 
A) April 15, 2024 
B) December 31, 2018 
C) April 15, 2021 
D) December 31, 2024

Question 12

What is the requirement for a substantial understatement of tax for individuals?

Accepted Answer

A) The understatement exceeds 10% of the tax required to be shown on the return. 
B) The understatement exceeds $5,000. 
C) The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000. 
D) The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000. 
A) The understatement exceeds 10% of the tax required to be shown on the return. 
B) The understatement exceeds $5,000. 
C) The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000. 
D) The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000.

Question 13

Which of the following communications between an accountant and client are privileged?
a)During the preparation of her 2018 tax return, Tammy informs her accountant that she contributed $25,000 to a qualified charitable organization.
b)After filing his tax return, a client mentions to his accountant that he forgot to report a $7,000 prize that he won playing bingo. He asks how he should correct the error.
c)A client tells his accountant that he will no longer pay alimony to his ex-wife.

Accepted Answer

Only communication (b)is privileged beca

Question 14

On July 25 of the following year, Joy files her current calendar-year tax return without having requested an extension. On October 8, she pays the amount due. The tax shown on her return is $25,000. Her current-year withholding tax is $20,000. Joy pays no estimated taxes and does not claim any tax credits on her current-year return. Assume she did not commit fraud. 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 15

Identify which of the following statements is true.

Accepted Answer

A) The 90-day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
B) A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C) The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90-day letter). 
D) All of the above are false. 
A) The 90-day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
B) A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C) The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90-day letter). 
D) All of the above are false.

Question 16

Jeff's tax liability for last year was $30,000. Jeff projects that his tax for this year will be only $25,000. Jeff is self-employed and, thus, will have no withholding. His AGI for last year did not exceed $150,000. How much estimated tax, at a minimum, should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?

Accepted Answer

Jeff's AGI for last year does not exceed

Question 17

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits. Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty. Assume your client's adjusted gross income last year was $140,000.

Accepted Answer

A) $7,650 
B) $7,750 
C) $8,750 
D) $11,000 
A) $7,650 
B) $7,750 
C) $8,750 
D) $11,000

Question 18

Anyone who prepares a tax return is subject to the provisions of Circular 230.

Accepted Answer

A) True 
 B)False

Question 19

The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

Accepted Answer

A) True 
 B)False

Question 20

The majority of the individual tax returns that are audited are selected under the DIF program.

Accepted Answer

A) True 
 B)False

Identify which of the following statements is false.

A substantial understatement of tax liability involves which of the following?

The IRS will issue a ruling

Identify which of the following statements is false.

A taxpayer can automatically escape the penalty for underpayment of taxes by

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

A letter ruling is a written determination that interprets and applies the tax laws to the taxpayer's specific set of facts.

Identify which of the following statements is false.

Identify which of the following statements is true.

Which of the following is not a reason for relief from the substantial understatement penalty?

What is the requirement for a substantial understatement of tax for individuals?

Identify which of the following statements is true.

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits. Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty. Assume your client's adjusted gross income last year was $140,000.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

The majority of the individual tax returns that are audited are selected under the DIF program.

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 false.

A substantial understatement of tax liability involves which of the following?

The IRS will issue a ruling

Identify which of the following statements is false.

A taxpayer can automatically escape the penalty for underpayment of taxes by

How does the IRS regulate the activities of compensated tax return preparers? In particular, list six acts that will cause a compensated tax return preparer to incur a penalty.

A letter ruling is a written determination that interprets and applies the tax laws to the taxpayer's specific set of facts.

Identify which of the following statements is false.

Identify which of the following statements is true.

Which of the following is not a reason for relief from the substantial understatement penalty?

What is the requirement for a substantial understatement of tax for individuals?

Identify which of the following statements is true.

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits. Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty. Assume your client's adjusted gross income last year was $140,000.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

The IRS will issue a 90-day letter (a Statutory Notice of Deficiency)if the taxpayer does not file a protest letter within 30 days of the date of the 30-day letter.

The majority of the individual tax returns that are audited are selected under the DIF program.

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