Exam 2: Tax Compliance, the Irs, and Tax Authorities

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

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

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.

Leslie made a mathematical mistake in computing her tax liability. Which audit program will likely catch Leslie's mistake?

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

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?

In researching a tax issue, Eric finds that the U.S. Circuit Court of Appeals for the Federal Circuit previously has ruled in favor of his tax position, whereas the 11th Circuit (Eric's circuit) previously has ruled against his tax position. If Eric is contemplating litigating his tax position with the IRS, he should prefer to have his case first tried by the U.S. Tax Court.

Campbell was researching a tax issue and found a favorable Tax Court opinion and an IRC Code Section that appears to answer the question. Is she finished with the research process? If so, why? If not, what must she do?

Because the U.S. District Court hears a broader set of cases, decisions by the U.S. District Court may be considered to have more authoritative weight than the U.S. Court of Federal Claims.

If April 15th falls on a Saturday, the due date for individual tax returns will be on Monday, April 17th.

Generally, code sections are arranged (grouped together):