Question 1

The statute of limitations for the deduction of a worthless security is 5 years.

Accepted Answer

A) True 
 B)False

Question 2

The IRS determined that John underpaid his 2016 tax liability by $6,000 due to negligence.In 2018, John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS.
a.Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation.
b.What part of the deficiency, income taxes, interest, and penalty, is deductible by John on his current tax return? Explain.

Accepted Answer

a.$1,200 = 20% × $6,000.
b.$0.None of th

Question 3

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

Accepted Answer

A) True 
 B)False

Question 4

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

Accepted Answer

A) True 
 B)False

Question 5

If a calendar year taxpayer's 2018 individual income tax return is mailed on June 15, 2019, the statute of limitations would normally run out on:

Accepted Answer

A) June 15, 2021 
B) June 15, 2022 
C) April 15, 2021 
D) April 15, 2022 
E) None of the above 
A) June 15, 2021 
B) June 15, 2022 
C) April 15, 2021 
D) April 15, 2022 
E) None of the above

Question 6

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

Accepted Answer

A) An individual taxpayer who has a marginal tax rate of 32 percent. 
B) An individual taxpayer who has an average tax rate of 32 percent. 
C) An individual taxpayer who has a marginal tax rate of 24 percent. 
D) The taxpayers in a and b will benefit equally. 
E) None of the above. 
A) An individual taxpayer who has a marginal tax rate of 32 percent. 
B) An individual taxpayer who has an average tax rate of 32 percent. 
C) An individual taxpayer who has a marginal tax rate of 24 percent. 
D) The taxpayers in a and b will benefit equally. 
E) None of the above.

Question 7

Which of the following is the most common type of audit for an individual taxpayer?

Accepted Answer

A) Office audit 
B) Telephone audit 
C) Correspondence audit 
D) Field audit 
E) None of the above 
A) Office audit 
B) Telephone audit 
C) Correspondence audit 
D) Field audit 
E) None of the above

Question 8

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Accepted Answer

A) True 
 B)False

Question 9

Indicate the date that the statute of limitations would run out on the following situations:
a.The IRS assesses additional taxes for a 2016 tax return audit on May 5, 2018.How long does the IRS have to collect the tax?
b.On April 1, 2018, the IRS asks for and the taxpayer agrees to an additional year from April 1, 2018 to complete an audit for a 2014 tax return which was filed on March 9, 2015.
c.Jeremy reported $10,000 of worthless debt on his 2017 tax return which he filed on August 3, 2018.
d.Jenny files her 2018 tax return on February 25, 2019.
e.James omits 7 percent of his income on his 2016 tax return which he filed on July 12, 2017.

Accepted Answer

a.May 5, 2028
b.April 1, 2019

Question 10

Janet did not file her tax return or pay her taxes for 2017 until November of 2018.She paid the following amounts to the IRS related to the late filing and payment of tax: $\begin{array}{llcc}
  \text {  Interest} & \$500 \
 \text {Underpayment of estimated tax penalty  } &350\
 \text {Failure-to-file and failure-to-pay penalties  } &1,700\
\end{array}$
 What amount of the above items may be deducted on Janet's 2018 individual income tax return? Explain.

Accepted Answer

$0.The interest is consumer in

Question 11

If a taxpayer makes all of his income from his job and various investments, which office of the IRS would likely investigate his return if it were audited?

Accepted Answer

A) Wage & Investment Division (W&I) 
B) Large & Midsize Business Office 
C) Small Business Office 
D) Criminal Investigation Office 
E) None of the above offices would perform the audit 
A) Wage & Investment Division (W&I) 
B) Large & Midsize Business Office 
C) Small Business Office 
D) Criminal Investigation Office 
E) None of the above offices would perform the audit

Question 12

The IRS charges a fixed 10 percent interest rate on underpayments of taxes.

Accepted Answer

A) True 
 B)False

Question 13

List three different ways that a tax return may be selected for an audit.

Accepted Answer

Any of the following will suffice:
1.By

Question 14

Which of the following is not a preparer penalty?

Accepted Answer

A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return. 
A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return.

Question 15

Craig commits fraud on his tax return.It is found that he was $40,000 deficient in his tax because of the fraud.What would his penalty be?

Accepted Answer

A) $500 
B) $30,000 
C) $40,000 
D) $0 
A) $500 
B) $30,000 
C) $40,000 
D) $0

Question 16

A tax preparer may be subject to a penalty for failing to provide a copy of the taxpayer's tax return to the client.

Accepted Answer

A) True 
 B)False

Question 17

Mark with a "Yes" if the following statement is true and is in Publication 1, The Taxpayers Bill of Rights.Mark with a "No" if the following statement is false or is not addressed in Publication 1.
a.If you do not agree with the IRS examiner's proposed changes in an audit, you must go directly to the court system to resolve the issue.
b.If a taxpayer is due a refund, but did not file a return, then the IRS uses statistics to reconstruct an individual's income in order to compute the refund for the taxpayer.
c.The tax law generally provides for interest on your refund if it is not paid within 45 days of the date you filed your return or filed your claim for refund.
d.Publication 1 explains how to file an amended tax return.

Accepted Answer

a.No
b.No

Question 18

A tax return with a large casualty loss would be most likely selected for audit through:

Accepted Answer

A) The Discriminant Function System 
B) Information from an informant 
C) Information from another governmental agency 
D) The Taxpayer Compliance Measurement Program 
E) None of the above 
A) The Discriminant Function System 
B) Information from an informant 
C) Information from another governmental agency 
D) The Taxpayer Compliance Measurement Program 
E) None of the above

Question 19

The Wage and Investment Office of the IRS handles small business taxpayers.

Accepted Answer

A) True 
 B)False

Question 20

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

Accepted Answer

A) True 
 B)False

The statute of limitations for the deduction of a worthless security is 5 years.

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

If a calendar year taxpayer's 2018 individual income tax return is mailed on June 15, 2019, the statute of limitations would normally run out on:

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

Which of the following is the most common type of audit for an individual taxpayer?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

If a taxpayer makes all of his income from his job and various investments, which office of the IRS would likely investigate his return if it were audited?

The IRS charges a fixed 10 percent interest rate on underpayments of taxes.

List three different ways that a tax return may be selected for an audit.

Which of the following is not a preparer penalty?

Craig commits fraud on his tax return.It is found that he was $40,000 deficient in his tax because of the fraud.What would his penalty be?

A tax preparer may be subject to a penalty for failing to provide a copy of the taxpayer's tax return to the client.

A tax return with a large casualty loss would be most likely selected for audit through:

The Wage and Investment Office of the IRS handles small business taxpayers.

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

The statute of limitations for the deduction of a worthless security is 5 years.

An "office audit" is an audit in which the revenue agent visits the taxpayer's office.

If a taxpayer has too much income tax withheld from his salary during the tax year, the IRS will pay interest on the excess amount.

If a calendar year taxpayer's 2018 individual income tax return is mailed on June 15, 2019, the statute of limitations would normally run out on:

Which of the following taxpayers will benefit most in terms of dollars saved as a result of tax planning to reduce taxes?

Which of the following is the most common type of audit for an individual taxpayer?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

If a taxpayer makes all of his income from his job and various investments, which office of the IRS would likely investigate his return if it were audited?

The IRS charges a fixed 10 percent interest rate on underpayments of taxes.

List three different ways that a tax return may be selected for an audit.

Which of the following is not a preparer penalty?

Craig commits fraud on his tax return.It is found that he was $40,000 deficient in his tax because of the fraud.What would his penalty be?

A tax preparer may be subject to a penalty for failing to provide a copy of the taxpayer's tax return to the client.

A tax return with a large casualty loss would be most likely selected for audit through:

The Wage and Investment Office of the IRS handles small business taxpayers.

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

The Individual Income Tax Return

Gross Income and Exclusions

Additional Income Part 1

Additional Income Part 2

Deductions and Adjustments to Income

Accounting Methods and Taxes

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments, and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Filters