Question 1

Which of the following should increase the likelihood that Ms.Piper's Form 1040 will be selected for audit by the IRS?

Accepted Answer

A) Ms.Piper files as head of household because she maintains a home for her 89-year old mother who has Alzheimer's disease. 
B) Ms.Piper's AGI is $58,400,and she deducted $17,590 of charitable contribution on her Schedule A. 
C) Ms.Piper reported $10,200 alimony income from her former spouse. 
D) None of the above should increase the likelihood of audit. 
A) Ms.Piper files as head of household because she maintains a home for her 89-year old mother who has Alzheimer's disease. 
B) Ms.Piper's AGI is $58,400,and she deducted $17,590 of charitable contribution on her Schedule A. 
C) Ms.Piper reported $10,200 alimony income from her former spouse. 
D) None of the above should increase the likelihood of audit. B

Question 2

Individuals are allowed to deduct interest paid on an income tax deficiency as a miscellaneous itemized deduction.

Accepted Answer

A) True 
 B)False  False

Question 3

The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.

Accepted Answer

A) True 
 B)False  False

Question 4

For no particularly good reason,Ms.Totter failed to file her current-year Form 1040 by the due date.Which of the following statements is false?

Accepted Answer

A) If the government owes Ms.Totter a refund of current-year tax,there is no penalty if she never files the return. 
B) The statute of limitations on the return will not begin to run until Ms.Totter files the return. 
C) If Ms.Totter owes additional current-year tax,she also will owe a late-filing and late-payment penalty. 
D) None of the above is false. 
A) If the government owes Ms.Totter a refund of current-year tax,there is no penalty if she never files the return. 
B) The statute of limitations on the return will not begin to run until Ms.Totter files the return. 
C) If Ms.Totter owes additional current-year tax,she also will owe a late-filing and late-payment penalty. 
D) None of the above is false.

Question 5

Which of the following is not a legal obligation of an income tax return preparer?

Accepted Answer

A) A preparer must endorse clients' refund checks. 
B) A preparer must furnish clients with copies of their returns. 
C) A preparer must sign clients' tax returns. 
D) A preparer must include his or her identifying number on clients' tax returns. 
A) A preparer must endorse clients' refund checks. 
B) A preparer must furnish clients with copies of their returns. 
C) A preparer must sign clients' tax returns. 
D) A preparer must include his or her identifying number on clients' tax returns.

Question 6

Mrs.Claire underpaid her current-year federal income tax by $11,017.If the entire underpayment was attributable to Mrs.Claire's failure to make a good faith effort to comply with the tax law,the IRS may impose a $2,754 negligence penalty.

Accepted Answer

A) True 
 B)False

Question 7

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

Accepted Answer

A) True 
 B)False

Question 8

If a taxpayer has insufficient financial means to pay a deficiency,the IRS may make an offer in compromise to settle for a lesser amount.

Accepted Answer

A) True 
 B)False

Question 9

The IRS who audited Mr.Kodak's 2014 Form 1040 assessed an $87,400 deficiency.If the agent believes that the entire deficiency was caused by Mr.Kodak's willful attempt to cheat the government,compute the resulting civil fraud penalty.

Accepted Answer

A) $17,480 
B) $21,850 
C) $65,550 
D) None of the above 
A) $17,480 
B) $21,850 
C) $65,550 
D) None of the above

Question 10

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S.District Court.

Accepted Answer

A) True 
 B)False

Question 11

Who of the following can't represent a taxpayer during an interview with the IRS?

Accepted Answer

A) Enrolled agent 
B) Certified public accountant 
C) Attorney 
D) All of the above can represent the taxpayer. 
A) Enrolled agent 
B) Certified public accountant 
C) Attorney 
D) All of the above can represent the taxpayer.

Question 12

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 13

Mr.and Mrs.Pitt filed a joint tax return last year.The couple divorced this year.The IRS audited their last year's return and determined that the Pitts had underpaid their tax by $38,200.Which of the following statements is true?

Accepted Answer

A) The IRS can assess either Mr.Pitt or Mrs.Pitt for the entire deficiency. 
B) Because the couple is divorced,the IRS must assess Mr.Pitt with a $19,100 deficiency and Mrs.Pitt with a $19,100 deficiency. 
C) Because the couple is divorced,the IRS must apportion the deficiency between Mr.and Mrs.Pitt based on their relative contribution to taxable income. 
D) The IRS must assess whichever spouse actually prepared the return for the entire deficiency. 
A) The IRS can assess either Mr.Pitt or Mrs.Pitt for the entire deficiency. 
B) Because the couple is divorced,the IRS must assess Mr.Pitt with a $19,100 deficiency and Mrs.Pitt with a $19,100 deficiency. 
C) Because the couple is divorced,the IRS must apportion the deficiency between Mr.and Mrs.Pitt based on their relative contribution to taxable income. 
D) The IRS must assess whichever spouse actually prepared the return for the entire deficiency.

Question 14

Only the government may appeal a tax case to the U.S.Supreme Court.

Accepted Answer

A) True 
 B)False

Question 15

If the IRS requests information during the course of an audit,the taxpayer has the right to know how the information will be used.

Accepted Answer

A) True 
 B)False

Question 16

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 17

An individual who did not graduate from high school has less exposure to a negligence penalty from the IRS than a college graduate.

Accepted Answer

A) True 
 B)False

Question 18

Mr.and Mrs.Latt use a fiscal year ending October 31 as the taxable year for filing their joint Form 1040.
a.What is the last date on which the Latts can apply for an automatic extension of time to file their return for fiscal year ending October 31,2017?
b.Assuming that the Latts make a timely application,what is the extended due date for the return?

Accepted Answer

a.February 15,2018 (15^th day of

Question 19

The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.

Accepted Answer

A) True 
 B)False

Question 20

Mr.and Mrs.Nestor were assessed a $51,240 income tax deficiency.Which of the following statements is false?

Accepted Answer

A) If the Nestors do not have cash on hand to pay the deficiency,the IRS can't force them to sell assets to raise the cash. 
B) If the Nestors do not have sufficient assets to pay the deficiency,the IRS may allow them to pay it off over time under an installment plan. 
C) If the Nestors do not have sufficient assets to pay the deficiency,the IRS may negotiate an offer in compromise for a lesser payment. 
D) Both if the Nestors do not have cash on hand to pay the deficiency,the IRS can't force them to sell assets to raise the cash and if the Nestors do not have sufficient assets to pay the deficiency,the IRS may negotiate an offer in compromise for a lesser payment are false. 
A) If the Nestors do not have cash on hand to pay the deficiency,the IRS can't force them to sell assets to raise the cash. 
B) If the Nestors do not have sufficient assets to pay the deficiency,the IRS may allow them to pay it off over time under an installment plan. 
C) If the Nestors do not have sufficient assets to pay the deficiency,the IRS may negotiate an offer in compromise for a lesser payment. 
D) Both if the Nestors do not have cash on hand to pay the deficiency,the IRS can't force them to sell assets to raise the cash and if the Nestors do not have sufficient assets to pay the deficiency,the IRS may negotiate an offer in compromise for a lesser payment are false.

Which of the following should increase the likelihood that Ms.Piper's Form 1040 will be selected for audit by the IRS?

Individuals are allowed to deduct interest paid on an income tax deficiency as a miscellaneous itemized deduction.

The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.

For no particularly good reason,Ms.Totter failed to file her current-year Form 1040 by the due date.Which of the following statements is false?

Which of the following is not a legal obligation of an income tax return preparer?

Mrs.Claire underpaid her current-year federal income tax by $11,017.If the entire underpayment was attributable to Mrs.Claire's failure to make a good faith effort to comply with the tax law,the IRS may impose a $2,754 negligence penalty.

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

If a taxpayer has insufficient financial means to pay a deficiency,the IRS may make an offer in compromise to settle for a lesser amount.

The IRS who audited Mr.Kodak's 2014 Form 1040 assessed an $87,400 deficiency.If the agent believes that the entire deficiency was caused by Mr.Kodak's willful attempt to cheat the government,compute the resulting civil fraud penalty.

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S.District Court.

Who of the following can't represent a taxpayer during an interview with the IRS?

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

Mr.and Mrs.Pitt filed a joint tax return last year.The couple divorced this year.The IRS audited their last year's return and determined that the Pitts had underpaid their tax by $38,200.Which of the following statements is true?

Only the government may appeal a tax case to the U.S.Supreme Court.

If the IRS requests information during the course of an audit,the taxpayer has the right to know how the information will be used.

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

An individual who did not graduate from high school has less exposure to a negligence penalty from the IRS than a college graduate.

The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.

Mr.and Mrs.Nestor were assessed a $51,240 income tax deficiency.Which of the following statements is false?

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, Partnerships, llcs, and S Corporations

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 should increase the likelihood that Ms.Piper's Form 1040 will be selected for audit by the IRS?

Individuals are allowed to deduct interest paid on an income tax deficiency as a miscellaneous itemized deduction.

The fact that a taxpayer receives a refund check indicates that the IRS is satisfied with the accuracy of the taxpayer's return.

For no particularly good reason,Ms.Totter failed to file her current-year Form 1040 by the due date.Which of the following statements is false?

Which of the following is not a legal obligation of an income tax return preparer?

Mrs.Claire underpaid her current-year federal income tax by $11,017.If the entire underpayment was attributable to Mrs.Claire's failure to make a good faith effort to comply with the tax law,the IRS may impose a $2,754 negligence penalty.

Taxpayers who win their case in court are automatically entitled to recover litigation expenses from the government.

If a taxpayer has insufficient financial means to pay a deficiency,the IRS may make an offer in compromise to settle for a lesser amount.

The IRS who audited Mr.Kodak's 2014 Form 1040 assessed an $87,400 deficiency.If the agent believes that the entire deficiency was caused by Mr.Kodak's willful attempt to cheat the government,compute the resulting civil fraud penalty.

A taxpayer who wants a jury trial must pay the tax deficiency and then sue the government for a refund in U.S.District Court.

Who of the following can't represent a taxpayer during an interview with the IRS?

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

Mr.and Mrs.Pitt filed a joint tax return last year.The couple divorced this year.The IRS audited their last year's return and determined that the Pitts had underpaid their tax by $38,200.Which of the following statements is true?

Only the government may appeal a tax case to the U.S.Supreme Court.

If the IRS requests information during the course of an audit,the taxpayer has the right to know how the information will be used.

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

An individual who did not graduate from high school has less exposure to a negligence penalty from the IRS than a college graduate.

The Taxpayer's Bill of Rights prevents the IRS from seizing a taxpayer's assets to satisfy a tax deficiency.

Mr.and Mrs.Nestor were assessed a $51,240 income tax deficiency.Which of the following statements is false?

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, Partnerships, llcs, and S Corporations

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