Exam 15: Administrative Procedures

Christie and Billy jointly file this year.Billy intentionally omits $5,000 in gambling winnings.Christie fraudulently deducts $1,000 in business expenses.The IRS audits the return,assesses a $2,500 deficiency and begins collection efforts two years after the timely filing of the return.Christie and Billy divorced one year before the deficiency was assessed.Can Christie receive any tax relief from the full $2,500 deficiency?

Jayne and Jon jointly file a tax return this year.Jayne fraudulently reports two expenses on Schedule C: $2,000 and $2,500.The IRS audits the return,assesses a $1,050 deficiency,and begins collection efforts two years after the timely filing by Jayne and Jon.What must Jon do to be relieved of the $1,050 tax liability?

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

Which of the following communications between an accountant and client are not privileged? a)An accountant orally communicates to his client that he should set up a foreign subsidiary to shift taxable income to a lower tax jurisdiction. b)An accountant privately submits to the client a plan for shifting taxable income to a lower tax jurisdiction. c)During a meeting in which a client is asking for advice relating to criminal fraud,the client tells his accountant that he lied to the IRS.

One of your corporate clients comes to you asking for advice regarding a proposed merger with XYZ Company.You (a)issue an opinion concerning the FMV of XYZ, (b)prepare pro forma financials for the merged entity to be, (c)draft shareholder resolutions for your client approving the proposed merger, (d)file a shareholder proxy statement with the U.S.Securities and Exchange Commission,and (e)advise your client's board of directors concerning the advantages of a Type A versus a Type B reorganization.Which of these activities,if any,constitutes the unauthorized practice of law?

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?

Identify which of the following statements is true.

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

If the taxpayer has credible evidence,the IRS bears the burden of proof in a tax dispute.

Identify which of the following statements is true.

Steve files his return on April 1 and pays the entire amount of tax for the year at that time,$5,000.He is audited and pays the deficiency of $1,500 two years later.The maximum amount Steve may file a claim for refund for eighteen months later is

Lucy files her current-year individual income tax return on August 5 of the following year,without having requested an extension.Her total tax is $10,000.Lucy pays $7,500 in a timely manner and the $2,500 balance when she files the return.Lucy did not engage in fraud and has no reasonable cause for late filing and late payment.Compute Lucy's penalties.

Identify which of the following statements is false.

Which of the following items can be omitted from a taxpayer's request for a ruling?

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000.

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?

If a return's due date is extended,a taxpayer

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

Billy,a calendar-year taxpayer,files his current year individual tax return on August 17 of the following year without having requested an extension.His return reports an amount due of $5,000.Billy pays this amount on November 23 of the following year.What are Billy's penalties for his failure to file and his failure to pay his tax on time? Assume Billy did not commit fraud.