Question 1

Ramon's tax return was randomly selected for audit. Which IRS program likely selected Ramon's return for audit?

Accepted Answer

A)  DIF system. 
B)  National Research Program. 
C)  Document perfection. 
D)  Information matching. 
E)  None of these. 
A)  DIF system. 
B)  National Research Program. 
C)  Document perfection. 
D)  Information matching. 
E)  None of these.

Question 2

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?

Accepted Answer

A)  2nd Circuit 
B)  Federal Circuit 
C)  1st Circuit 
D)  2nd Circuit or the Federal Circuit 
E)  None of these 
A)  2nd Circuit 
B)  Federal Circuit 
C)  1st Circuit 
D)  2nd Circuit or the Federal Circuit 
E)  None of these

Question 3

Mel recently received a 30-day letter from the IRS. Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 - $80,000), the IRS agent auditing his return only identified one item that will require a more modest adjustment ($10,000). Mel feels strongly that the $10,000 adjustment would not hold in court and was surprised that the IRS agent did not identify some of the other potential larger issues. What are Mel's choices with the 30 day letter and what factors should influence his decisions?

Accepted Answer

The "30-day letter" instructs the taxpay

Question 4

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

Accepted Answer

A)  judicial hierarchy 
B)  the Goldman rule 
C)  judicial consistency 
D)  stare decisis 
E)  None of these 
A)  judicial hierarchy 
B)  the Goldman rule 
C)  judicial consistency 
D)  stare decisis 
E)  None of these

Question 5

The IRS DIF system checks each tax return for mathematical mistakes.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not considered a primary authority?

Accepted Answer

A)  Tax Court case 
B)  Regulation 
C)  Revenue ruling 
D)  Tax service 
E)  None of these. 
A)  Tax Court case 
B)  Regulation 
C)  Revenue ruling 
D)  Tax service 
E)  None of these.

Question 7

This year April 15th falls on a Saturday. Individual tax returns will be due on:

Accepted Answer

A)  April 14th. 
B)  April 15th. 
C)  April 16th. 
D)  April 17th. 
E)  None of these. 
A)  April 14th. 
B)  April 15th. 
C)  April 16th. 
D)  April 17th. 
E)  None of these.

Question 8

Which of the following is a false statement? A taxpayer filing a fraudulent tax return:

Accepted Answer

A)  is potentially subject to criminal penalties. 
B)  is potentially subject to civil penalties. 
C)  is potentially subject to fines and a prison sentence. 
D)  will have an unlimited statute of limitations for the fraudulent tax return. 
E)  None of these. 
A)  is potentially subject to criminal penalties. 
B)  is potentially subject to civil penalties. 
C)  is potentially subject to fines and a prison sentence. 
D)  will have an unlimited statute of limitations for the fraudulent tax return. 
E)  None of these.

Question 9

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a common method that the IRS uses to select returns for audit?

Accepted Answer

A)  DIF system. 
B)  Tax select system. 
C)  Information matching. 
D)  Document perfection. 
E)  None of these. 
A)  DIF system. 
B)  Tax select system. 
C)  Information matching. 
D)  Document perfection. 
E)  None of these.

Question 11

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?

Accepted Answer

Campbell is not finished. Once the tax r

Question 12

Which of the following has the highest authoritative weight?

Accepted Answer

A)  Legislative regulation. 
B)  Private letter ruling. 
C)  Revenue ruling. 
D)  Action on decision. 
E)  Revenue procedure. 
A)  Legislative regulation. 
B)  Private letter ruling. 
C)  Revenue ruling. 
D)  Action on decision. 
E)  Revenue procedure.

Question 13

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

Accepted Answer

A)  if the position is frivolous and disclosed on the tax return. 
B)  if the position complies with the standards imposed by the applicable tax authority. 
C)  only if the position meets the "more likely than not" standard. 
D)  only if the position meets the "clear and convincing evidence" standard. 
E)  None of these. 
A)  if the position is frivolous and disclosed on the tax return. 
B)  if the position complies with the standards imposed by the applicable tax authority. 
C)  only if the position meets the "more likely than not" standard. 
D)  only if the position meets the "clear and convincing evidence" standard. 
E)  None of these.

Question 14

Closed facts are especially conducive to tax planning.

Accepted Answer

A) True 
 B)False

Question 15

Henry filed his 2014 tax return on May 15th, 2015. The statute of limitations for IRS assessment on Henry's 2014 tax return should end:

Accepted Answer

A)  May 15th, 2017. 
B)  April 15th, 2017. 
C)  May 15th, 2018. 
D)  April 15th, 2018. 
E)  None of these. 
A)  May 15th, 2017. 
B)  April 15th, 2017. 
C)  May 15th, 2018. 
D)  April 15th, 2018. 
E)  None of these.

Question 16

Which of the following types of tax services are arranged by code section?

Accepted Answer

A)  legal tax service. 
B)  annotated tax service. 
C)  professional tax service. 
D)  topical tax service. 
E)  None of these. 
A)  legal tax service. 
B)  annotated tax service. 
C)  professional tax service. 
D)  topical tax service. 
E)  None of these.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a factor that determines whether a taxpayer is required to file a tax return?

Accepted Answer

A)  Filing status. 
B)  Taxpayer's gross income. 
C)  Taxpayer's employment. 
D)  Taxpayer's age. 
E)  None of these. 
A)  Filing status. 
B)  Taxpayer's gross income. 
C)  Taxpayer's employment. 
D)  Taxpayer's age. 
E)  None of these.

Question 19

Proposed and Temporary Regulations have the same authoritative weight.

Accepted Answer

A) True 
 B)False

Question 20

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Accepted Answer

A) True 
 B)False

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

Ramon's tax return was randomly selected for audit. Which IRS program likely selected Ramon's return for audit?

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?

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

The IRS DIF system checks each tax return for mathematical mistakes.

Which of the following is not considered a primary authority?

This year April 15th falls on a Saturday. Individual tax returns will be due on:

Which of the following is a false statement? A taxpayer filing a fraudulent tax return:

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Which of the following is not a common method that the IRS uses to select returns for audit?

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?

Which of the following has the highest authoritative weight?

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

Closed facts are especially conducive to tax planning.

Henry filed his 2014 tax return on May 15th, 2015. The statute of limitations for IRS assessment on Henry's 2014 tax return should end:

Which of the following types of tax services are arranged by code section?

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

Which of the following is not a factor that determines whether a taxpayer is required to file a tax return?

Proposed and Temporary Regulations have the same authoritative weight.

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

An Introduction to Tax

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

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