Exam 2: Tax Compliance, The IRS and Tax Authorities

The three basic types of IRS examinations are computer exams,office exams,and business exams.

In researching a question of fact,the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

According to Statement on Standards for Tax Services No.1,a tax practitioner can recommend a tax return position:

Princess,who resides in the 2ⁿᵈ Circuit,recently found a circuit court case that is favorable to her income tax research question.Which of the following circuits would she prefer to have issued the opinion?

Greg earned $21,500 this year and had $1,500 of federal income taxes withheld from his salary.Assuming that Greg is single,25 years old,and will have a total tax liability of $1,000 (and thus will receive a $500)refund,he:

Mary Ann is working on a pretty big research project.Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact,whereas others are likely to be questions of law.Explain the difference between the two types of questions and how this would influence her research.

Dominic earned $1,500 this year,and his employer withheld $200 of federal income tax from his salary.Assuming that Dominic is single,30 years old,and will have zero tax liability this year,he:

Which of the following has the highest authoritative weight?

Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

Lindy,a tax intern,is beginning her first tax research case for her employer.Her manager has given her a basic understanding of the facts and has identified the basic research question.Lindy is now ready to begin searching for relevant tax authorities.Describe the different types of research tools available to help a tax researcher locate relevant authority and identify which type may be especially useful for Lindy.

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income.What are the potential ramifications to her client of this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

Chris and Chuck were recently debating whether the Internal Revenue Code is "logical." Chris offers that she has briefly reviewed the Code and could hardly understand its organizational structure,if there is one.Please describe the basic organization of the code and how understanding its organization may be especially beneficial to the tax researcher.

For the following tax returns,identify the method the IRS likely used to select the return for audit. a.Dan made a mistake in adding his income on his tax return. b.Juanita failed to report her salary from her 2ⁿᵈ job on her tax return. c.Michael and Venita deducted a relatively large amount of travel expenses on their tax return for their business.The travel expense is large relative to other taxpayers in similar businesses with similar levels of income. d.Paul and Melissa recently went through a very nasty divorce.One of the issues was Paul's less than forthright accounting of his income in determining the appropriate level of alimony.

Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income.If Tyrone's tax return is chosen for audit because of his large charitable contributions,which audit program likely identified Tyrone's tax return for audit?

Bill filed his 2017 tax return on March 15ᵗʰ,2018.The statute of limitations for IRS assessment on Bill's 2017 tax return should end:

Closed facts are especially conducive to tax planning.

Henry filed his 2017 tax return on May 15ᵗʰ,2018.The statute of limitations for IRS assessment on Henry's 2017 tax return should end:

A taxpayer can avoid a substantial understatement of tax penalty:

Which of the following audits is the least common,broadest in scope,and typically most complex?