Question 1

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

Accepted Answer

A)  $50 
B)  $250 
C)  $1,000 
D)  20% of the understatement 
A)  $50 
B)  $250 
C)  $1,000 
D)  20% of the understatement

Question 2

According to Circular 230,what should a CPA do upon discovery of an error in a client's prior-year return?

Accepted Answer

A)  Notify the IRS of the error. 
B)  Inform the client of the error and its tax consequences. 
C)  File an amended return for the client. 
D)  Do nothing. 
A)  Notify the IRS of the error. 
B)  Inform the client of the error and its tax consequences. 
C)  File an amended return for the client. 
D)  Do nothing.

Question 3

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Accepted Answer

The IRS is organized functionally into f

Question 4

Richard recently won a popular television reality show and its one million dollar prize.However,he omitted the prize money from his tax return for the year.What penalties can the IRS assess?

Accepted Answer

• Criminal or civil fraud
• Negligence o

Question 5

Identify which of the following statements is false.

Accepted Answer

A)  The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B)  Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C)  A corporation must file a tax return even if it has no gross income. 
D)  Extensions of time for filing tax returns may be obtained. 
A)  The IRS will not issue a ruling on the topic of whether compensation is reasonable. 
B)  Tax returns for all taxpayers must be filed on or before the fifteenth day of the fourth month following the year-end. 
C)  A corporation must file a tax return even if it has no gross income. 
D)  Extensions of time for filing tax returns may be obtained.

Question 6

Paul's tax liability for last year was $30,000.Paul projects that his tax for this year will be $40,000.Paul is self-employed and,thus,will have no withholding.His AGI for last year did not exceed $150,000.How much estimated tax should Paul pay for this year to avoid the penalty for underpayment of estimated taxes?

Accepted Answer

Because Paul's AGI for last ye

Question 7

Pablo,a bachelor,owes $80,000 of additional taxes,all due to fraud.What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec.7201?

Accepted Answer

a)The civil fraud penalty is $

Question 8

An automatic extension of time from the regular filing date for an individual tax return may be received,without giving the IRS a reason,for

Accepted Answer

A)  2 months. 
B)  3 months. 
C)  4 months. 
D)  6 months. 
A)  2 months. 
B)  3 months. 
C)  4 months. 
D)  6 months.

Question 9

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

Accepted Answer

A taxpayer should initially look to prim

Question 10

Identify which of the following statements is true.

Accepted Answer

A)  Form 870-AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
B)  Signing of Form 870-AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
C)  The IRS will issue a 90-day letter (a Statutory Notice of Deficiency) if the taxpayer does not file a protest letter within 10 days of the date of the 30-day letter. 
D)  All of the above are false. 
A)  Form 870-AD is used if the taxpayer and IRS representative agree to a lesser tax liability than that originally proposed by the Service. 
B)  Signing of Form 870-AD by the taxpayer does not generally preclude the subsequent filing of a refund claim. 
C)  The IRS will issue a 90-day letter (a Statutory Notice of Deficiency) if the taxpayer does not file a protest letter within 10 days of the date of the 30-day letter. 
D)  All of the above are false.

Question 11

Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return.
II.A willful attempt to understate any client's tax liability on a return or claim for a refund.

Accepted Answer

A)  I only 
B)  II only 
C)  neither I nor II 
D)  both I and II 
A)  I only 
B)  II only 
C)  neither I nor II 
D)  both I and II

Question 12

On July 25 of the following year,Joy files her current calendar-year tax return without having requested an extension.On October 8,she pays the amount due.The tax shown on her return is $25,000.Her current-year withholding tax is $20,000.Joy pays no estimated taxes and does not claim any tax credits on her current-year return.Assume she did not commit fraud.Will Joy owe interest,and if so,on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr

Question 13

Kelly,a calendar-year taxpayer,files her 2008 individual return on March 30,2013,and pays the amount due at the same time.Later,she discovers some deductions that she should have claimed on the return.By what date must she file a claim for refund?

Accepted Answer

She would file by th

Question 14

Tax return preparers can be penalized for the following activities except

Accepted Answer

A)  failure to sign a return. 
B)  failure to give a copy of the return to the taxpayer. 
C)  failure to maintain IRS continuing education requirements. 
D)  failure to provide the preparer's identification number on the return. 
A)  failure to sign a return. 
B)  failure to give a copy of the return to the taxpayer. 
C)  failure to maintain IRS continuing education requirements. 
D)  failure to provide the preparer's identification number on the return.

Question 15

Latka Novatny gave you the following information to use in the preparation of his current year's tax return:
   In addition,he received $40,000 from a relative for whom he had worked previously.You have researched whether the $40,000 should be classified as a gift or compensation and are confident that substantial authority exists for classifying it as a gift.What tax compliance issues should you consider in deciding whether to report or exclude the $40,000?

Accepted Answer

• Will Latka be liable for a penalty if

Question 16

The IRS provides advice concerning an issue that arises during an audit by issuing

Accepted Answer

A)  a revenue ruling. 
B)  an audit memorandum. 
C)  a technical advice memorandum. 
D)  a private letter ruling. 
A)  a revenue ruling. 
B)  an audit memorandum. 
C)  a technical advice memorandum. 
D)  a private letter ruling.

Question 17

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year.No extension was requested,and there is not a reasonable cause for the late filing.The return shows a balance due of $800 of tax.The late filing penalty is

Accepted Answer

A)  $0. 
B)  $40. 
C)  $80. 
D)  $120. 
A)  $0. 
B)  $40. 
C)  $80. 
D)  $120.

Question 18

Gerald requests an extension for filing his last year's individual income tax return.His tax liability is $10,000,of which $8,000 was withheld,leaving a balance due of $2,000 when he files on August 1 of the current year.His penalty for failure to pay the tax on time is

Accepted Answer

A)  $0. 
B)  $40. 
C)  $300. 
D)  $400. 
A)  $0. 
B)  $40. 
C)  $300. 
D)  $400.

Question 19

Identify which of the following statements is true.

Accepted Answer

A)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C)  The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D)  All of the above are true. 
A)  If a taxpayer has been audited in at least one of the two previous years on the same item and the earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit relief rule. 
B)  A taxpayer can request and always receive an exemption from an audit by the IRS if his return was audited in at least one of the two previous years and the previous audit did not result in any change to his tax liability. 
C)  The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to pay the tax. 
D)  All of the above are true.

Question 20

Identify which of the following statements is true.

Accepted Answer

A)  The 90-day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90-day letter). 
D)  All of the above are false. 
A)  The 90-day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court. 
B)  A taxpayer can choose to initiate tax litigation in a U.S. district court, the Tax Court, or a Court of Appeals. 
C)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90-day letter). 
D)  All of the above are false.

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

According to Circular 230,what should a CPA do upon discovery of an error in a client's prior-year return?

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Richard recently won a popular television reality show and its one million dollar prize.However,he omitted the prize money from his tax return for the year.What penalties can the IRS assess?

Identify which of the following statements is false.

Pablo,a bachelor,owes $80,000 of additional taxes,all due to fraud.What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec.7201?

An automatic extension of time from the regular filing date for an individual tax return may be received,without giving the IRS a reason,for

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

Identify which of the following statements is true.

Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return. II.A willful attempt to understate any client's tax liability on a return or claim for a refund.

Kelly,a calendar-year taxpayer,files her 2008 individual return on March 30,2013,and pays the amount due at the same time.Later,she discovers some deductions that she should have claimed on the return.By what date must she file a claim for refund?

Tax return preparers can be penalized for the following activities except

The IRS provides advice concerning an issue that arises during an audit by issuing

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year.No extension was requested,and there is not a reasonable cause for the late filing.The return shows a balance due of $800 of tax.The late filing penalty is

Gerald requests an extension for filing his last year's individual income tax return.His tax liability is $10,000,of which $8,000 was withheld,leaving a balance due of $2,000 when he files on August 1 of the current year.His penalty for failure to pay the tax on time is

Identify which of the following statements is true.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

US Taxation of Foreign-Related Transactions

Filters

Exam 15: Administrative Procedures

What is the penalty for a tax return preparer who lacks substantial authority to take a return position?

According to Circular 230,what should a CPA do upon discovery of an error in a client's prior-year return?

Explain how the Internal Revenue Service is organized to be efficient and client-oriented.

Richard recently won a popular television reality show and its one million dollar prize.However,he omitted the prize money from his tax return for the year.What penalties can the IRS assess?

Identify which of the following statements is false.

Pablo,a bachelor,owes $80,000 of additional taxes,all due to fraud.What is the amount of the civil fraud penalty? What criminal fraud penalty might be imposed under Sec.7201?

An automatic extension of time from the regular filing date for an individual tax return may be received,without giving the IRS a reason,for

How does a taxpayer determine if "substantial authority" exists for a tax treatment the taxpayer desires to adopt?

Identify which of the following statements is true.

Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return. II.A willful attempt to understate any client's tax liability on a return or claim for a refund.

Kelly,a calendar-year taxpayer,files her 2008 individual return on March 30,2013,and pays the amount due at the same time.Later,she discovers some deductions that she should have claimed on the return.By what date must she file a claim for refund?

Tax return preparers can be penalized for the following activities except

The IRS provides advice concerning an issue that arises during an audit by issuing

A calendar-year individual taxpayer files last year's income tax return on July 1 of the current year.No extension was requested,and there is not a reasonable cause for the late filing.The return shows a balance due of $800 of tax.The late filing penalty is

Gerald requests an extension for filing his last year's individual income tax return.His tax liability is $10,000,of which $8,000 was withheld,leaving a balance due of $2,000 when he files on August 1 of the current year.His penalty for failure to pay the tax on time is

Identify which of the following statements is true.

Identify which of the following statements is true.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

US Taxation of Foreign-Related Transactions

Filters