Question 1

Which of the following statements about criminal tax fraud is false?

Accepted Answer

A)  Criminal tax fraud is a felony offense. 
B)  A taxpayer must be convicted of criminal tax fraud in federal court. 
C)  Individuals who are convicted of criminal tax fraud may be fined or imprisoned or both. 
D)  None of the above is false. 
A)  Criminal tax fraud is a felony offense. 
B)  A taxpayer must be convicted of criminal tax fraud in federal court. 
C)  Individuals who are convicted of criminal tax fraud may be fined or imprisoned or both. 
D)  None of the above is false.

Question 2

Taxpayers should keep all supporting documentation (credit card statements, etc.) for a tax return for at least three years after the return is filed.

Accepted Answer

A) True 
 B)False

Question 3

If the IRS assesses additional tax against a corporation after it has liquidated, the shareholders can't be held liable for the tax due.

Accepted Answer

A) True 
 B)False

Question 4

Both individual and corporate taxpayers must pay any balance due of their tax by the extended due date of the tax return for the year.

Accepted Answer

A) True 
 B)False

Question 5

Mr and Mrs Chung filed their unextended 2017 Form 1040 on May 30, 2018, and had no reasonable cause for the delinquency. The return showed a $10,479 balance of tax due. Compute the Chungs' late-filing and late-payment penalty.

Accepted Answer

A)  $524 
B)  $1,048 
C)  $2,620 
D)  None of the above 
A)  $524 
B)  $1,048 
C)  $2,620 
D)  None of the above

Question 6

Which of the following statements about a tax deficiency is true?

Accepted Answer

A)  If a taxpayer is assessed a deficiency, the government will charge interest on the deficiency regardless of the reason for the deficiency. 
B)  Individuals who pay interest on a tax deficiency can deduct it as an itemized deduction. 
C)  Individuals who pay interest on a tax deficiency can deduct it as a business expense. 
D)  Statements A. and B. are both true. 
A)  If a taxpayer is assessed a deficiency, the government will charge interest on the deficiency regardless of the reason for the deficiency. 
B)  Individuals who pay interest on a tax deficiency can deduct it as an itemized deduction. 
C)  Individuals who pay interest on a tax deficiency can deduct it as a business expense. 
D)  Statements A. and B. are both true.

Question 7

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Accepted Answer

A) True 
 B)False

Question 8

Only one spouse must sign a jointly filed Form 1040.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about the U.S. Tax Court is false?

Accepted Answer

A)  Tax Court judges are experts who specialize in the tax law. 
B)  Individuals can request a jury trial in the Tax Court. 
C)  The Tax Court is one of three courts of original jurisdiction for tax cases. 
D)  Both individual and corporate taxpayers can take their case to the Tax Court. 
A)  Tax Court judges are experts who specialize in the tax law. 
B)  Individuals can request a jury trial in the Tax Court. 
C)  The Tax Court is one of three courts of original jurisdiction for tax cases. 
D)  Both individual and corporate taxpayers can take their case to the Tax Court.

Question 10

In which of the following is not a condition for relief of liability under the innocent spouse rule?

Accepted Answer

A)  The deficiency must be attributable to erroneous items of the person's spouse. 
B)  The person must establish that in signing the return he or she did not know, and had no reason to know, that the return understated the correct tax. 
C)  Taking into account all the facts and circumstances, it is inequitable to hold the person liable for the deficiency. 
D)  The person is divorced from or in the process of divorcing their spouse. 
A)  The deficiency must be attributable to erroneous items of the person's spouse. 
B)  The person must establish that in signing the return he or she did not know, and had no reason to know, that the return understated the correct tax. 
C)  Taking into account all the facts and circumstances, it is inequitable to hold the person liable for the deficiency. 
D)  The person is divorced from or in the process of divorcing their spouse.

Question 11

Mr Fiocchi filed his unextended 2017 Form 1040 on July 22, 2018, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr Fiocchi's late-filing and late-payment penalty.

Accepted Answer

A)  -0- 
B)  $191 
C)  $286 
D)  $381 
A)  -0- 
B)  $191 
C)  $286 
D)  $381

Question 12

Macy filed her 2017 tax return on its extended due date of October 17, 2018. The IRS has until December 31, 2020, to audit this return.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements about the DIF score is true?

Accepted Answer

A)  Details of the DIF score computation are available on the IRS website. 
B)  The lower the DIF score assigned to a tax return, the higher the probability that the return will be selected for audit. 
C)  Theoretically, the DIF score measures a tax return's potential for generating additional revenue on audit. 
D)  Taxpayers can contact the IRS to determine their DIF score before filing their annual tax return. 
A)  Details of the DIF score computation are available on the IRS website. 
B)  The lower the DIF score assigned to a tax return, the higher the probability that the return will be selected for audit. 
C)  Theoretically, the DIF score measures a tax return's potential for generating additional revenue on audit. 
D)  Taxpayers can contact the IRS to determine their DIF score before filing their annual tax return.

Question 14

F&D Inc. ceased operations and dissolved under state law in 2016. Mrs Herron, a 20% shareholder, received a $490,300 liquidating distribution from F&D. This year, the IRS determined that F&D underpaid its 2015 and 2016 income tax by $967,100. How much of this deficiency can the IRS assess against Mrs Herron?

Accepted Answer

A)  -0- 
B)  $193,420 
C)  $490,300 
D)  $967,100 
A)  -0- 
B)  $193,420 
C)  $490,300 
D)  $967,100

Question 15

Every year, the IRS selects a certain number of Form 1040s for audit. What is the approximate average audit coverage rate (percentage of individual returns filed selected for audit)?

Accepted Answer

A)  About 1% 
B)  About 5% 
C)  Between 10% and 12% 
D)  None of the above 
A)  About 1% 
B)  About 5% 
C)  Between 10% and 12% 
D)  None of the above

Question 16

An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.

Accepted Answer

A) True 
 B)False

Question 17

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

Accepted Answer

A) True 
 B)False

Question 18

A special agent is assigned to a tax investigation to determine if the government has enough evidence to indict the taxpayer for criminal fraud.

Accepted Answer

A) True 
 B)False

Question 19

The revenue agent who audited Mr Silver's 2015 Form 1040 concluded that Mr Silver deliberately disregarded the tax rules about charitable contributions. Consequently, the agent disallowed $19,320 of Mr Silver's contribution deduction. Mr Silver also miscalculated his AMT in spite of his good faith effort to make the difficult calculation. Because of these two errors, the agent assessed a tax deficiency for 2015. Which of the following statements is false?

Accepted Answer

A)  The agent has the authority to impose a negligence penalty in addition to the deficiency. 
B)  The agent could impose a negligence penalty on the entire deficiency. 
C)  The agent could impose a negligence penalty on the portion of the deficiency attributable to the disallowed contribution deduction. 
D)  If the agent imposes a negligence penalty, Mr. Silver has the right to appeal the penalty. 
A)  The agent has the authority to impose a negligence penalty in addition to the deficiency. 
B)  The agent could impose a negligence penalty on the entire deficiency. 
C)  The agent could impose a negligence penalty on the portion of the deficiency attributable to the disallowed contribution deduction. 
D)  If the agent imposes a negligence penalty, Mr. Silver has the right to appeal the penalty.

Question 20

Which type of audit is handled by a revenue agent?

Accepted Answer

A)  Correspondence examination 
B)  Office examination 
C)  Field examination 
D)  All of the above 
A)  Correspondence examination 
B)  Office examination 
C)  Field examination 
D)  All of the above

Which of the following statements about criminal tax fraud is false?

Taxpayers should keep all supporting documentation (credit card statements, etc.) for a tax return for at least three years after the return is filed.

If the IRS assesses additional tax against a corporation after it has liquidated, the shareholders can't be held liable for the tax due.

Both individual and corporate taxpayers must pay any balance due of their tax by the extended due date of the tax return for the year.

Mr and Mrs Chung filed their unextended 2017 Form 1040 on May 30, 2018, and had no reasonable cause for the delinquency. The return showed a $10,479 balance of tax due. Compute the Chungs' late-filing and late-payment penalty.

Which of the following statements about a tax deficiency is true?

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Only one spouse must sign a jointly filed Form 1040.

Which of the following statements about the U.S. Tax Court is false?

In which of the following is not a condition for relief of liability under the innocent spouse rule?

Mr Fiocchi filed his unextended 2017 Form 1040 on July 22, 2018, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr Fiocchi's late-filing and late-payment penalty.

Macy filed her 2017 tax return on its extended due date of October 17, 2018. The IRS has until December 31, 2020, to audit this return.

Which of the following statements about the DIF score is true?

Every year, the IRS selects a certain number of Form 1040s for audit. What is the approximate average audit coverage rate (percentage of individual returns filed selected for audit)?

An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

A special agent is assigned to a tax investigation to determine if the government has enough evidence to indict the taxpayer for criminal fraud.

Which type of audit is handled by a revenue agent?

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes as Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income from Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

Filters

Exam 18: The Tax Compliance Process

Which of the following statements about criminal tax fraud is false?

Taxpayers should keep all supporting documentation (credit card statements, etc.) for a tax return for at least three years after the return is filed.

If the IRS assesses additional tax against a corporation after it has liquidated, the shareholders can't be held liable for the tax due.

Both individual and corporate taxpayers must pay any balance due of their tax by the extended due date of the tax return for the year.

Mr and Mrs Chung filed their unextended 2017 Form 1040 on May 30, 2018, and had no reasonable cause for the delinquency. The return showed a $10,479 balance of tax due. Compute the Chungs' late-filing and late-payment penalty.

Which of the following statements about a tax deficiency is true?

A person can't be relieved of liability for a tax deficiency under the innocent spouse rule if that person enjoyed significant financial benefit from taxable income omitted from the return.

Only one spouse must sign a jointly filed Form 1040.

Which of the following statements about the U.S. Tax Court is false?

In which of the following is not a condition for relief of liability under the innocent spouse rule?

Mr Fiocchi filed his unextended 2017 Form 1040 on July 22, 2018, and had no reasonable cause for the delinquency. The return showed a $1,906 overpayment of tax (refund due). Compute Mr Fiocchi's late-filing and late-payment penalty.

Macy filed her 2017 tax return on its extended due date of October 17, 2018. The IRS has until December 31, 2020, to audit this return.

Which of the following statements about the DIF score is true?

Every year, the IRS selects a certain number of Form 1040s for audit. What is the approximate average audit coverage rate (percentage of individual returns filed selected for audit)?

An individual taxpayer is not required to give the IRS an explanation for extending the filing date for Form 1040.

The geographic location of the trial court in a tax dispute determines which of the appellate courts will hear an appeal.

A special agent is assigned to a tax investigation to determine if the government has enough evidence to indict the taxpayer for criminal fraud.

Which type of audit is handled by a revenue agent?

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes as Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income from Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

Filters