Exam 15: Administrative Procedures

Linda's individual tax return for the current year is subject to an IRS audit.The IRS assesses a $10,000 deficiency,$4,000 of which is due to Linda's negligence.What is Linda's negligence penalty?

Identify which of the following statements is true.

Jeff's tax liability for last year was $30,000.Jeff projects that his tax for this year will be only $25,000.Jeff is self-employed and,thus,will have no withholding.His AGI for last year did not exceed $150,000.How much estimated tax,at a minimum,should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?

A taxpayer will receive a 30-day letter

Identify which of the following statements is true.

One of your corporate clients has recently filed for bankruptcy.In the course of the proceedings,you (a)prepare a plan of reorganization that alters the rights of preferred stockholders,(b)notify the company's creditors of an impending bulk transfer of the company's assets,(c)review IRS secured claims against these assets,(d)restructure the company's debt by reducing its principal amount and extending its maturity,and (e)advise the bankruptcy court as to how this restructuring will impact the company's NOLs.Which of these activities,if any,constitutes the unauthorized practice of law?

Identify which of the following statements is false.

All of the following requirements must be met in order to establish innocent spouse relief except which of the following?

A taxpayer who fails to file and fails to pay taxes is subject to a combined 5% monthly penalty on the underpayment.

The IRS audits Kiara's current-year individual return and determines that,among other errors,she negligently did not report dividend income of $10,000.The deficiency with respect to the dividends is $2,800.The IRS argues for an additional $12,000 deficiency for various other errors that do not involve negligence.What is Kiara's negligence penalty for the $14,800 in deficiencies?

How long does a taxpayer have to file a petition with the U.S.Tax Court following the date of the Statutory Notice of Deficiency?

The program specifically designed to identify returns with a high potential for a deficiency assessment is the

The 90-day letter (Statutory Notice of Deficiency)gives the taxpayer 90 days to file a petition with the Tax Court or to pay the disputed tax.

In which of the situations below will a taxpayer not be assessed interest on the tax remitted?

Terry files his return on March 31.The return shows taxes of $6,000,and Terry pays this entire amount when he files his return.By what time must he file a claim of refund?

A six-year statute of limitation rule applies if the taxpayer

On August 13 of the following year,Joy files her current calendar-year tax return and pays the amount due without having requested an extension.The tax shown on her return is $25,000.Her current-year withholding tax is $15,000.Joy pays no estimated taxes and does not claim any tax credits on her current-year return.Calculate the penalties that the IRS is likely to assess.Ignore the penalty for underpayment of estimated taxes.Assume she did not commit fraud.

Identify which of the following statements is false.

What is the requirement for a substantial understatement of tax for individuals?

The statute of limitations is unlimited for a tax return that is never filed.