Question 1

Identify which of the following statements is true.

Accepted Answer

A) The failure-to-pay penalty is waived if the additional tax due with the filing of the extended return does not exceed 15% of the tax owed for the year. 
B) If both the failure-to-file and the failure-to-pay penalties are owed,the taxpayer will incur a maximum addition to tax of 5.5% per month. 
C) Individuals having substantial income from sources not subject to regular withholding generally should make quarterly estimated tax payments to the IRS. 
D) All of the above are false. 
A) The failure-to-pay penalty is waived if the additional tax due with the filing of the extended return does not exceed 15% of the tax owed for the year. 
B) If both the failure-to-file and the failure-to-pay penalties are owed,the taxpayer will incur a maximum addition to tax of 5.5% per month. 
C) Individuals having substantial income from sources not subject to regular withholding generally should make quarterly estimated tax payments to the IRS. 
D) All of the above are false.

Question 2

A calendar-year individual taxpayer files last year's income tax return on October 17 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 $1,500 of tax.The late filing penalty is

Accepted Answer

A) $0. 
B) $75. 
C) $375. 
D) $450. 
A) $0. 
B) $75. 
C) $375. 
D) $450.

Question 3

Which of the following statements regarding Circular 230 is false?

Accepted Answer

A) Circular 230 applies to all tax return preparers. 
B) Circular 230 defines practice before the IRS. 
C) Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D) Circular 230 applies to CPAs,enrolled agents,enrolled actuaries,and attorneys. 
A) Circular 230 applies to all tax return preparers. 
B) Circular 230 defines practice before the IRS. 
C) Circular 230 provides guidance as to the level of authority necessary for a CPA to take a tax return position. 
D) Circular 230 applies to CPAs,enrolled agents,enrolled actuaries,and attorneys.

Question 4

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.Calculate the penalties that the IRS is likely to assess.Ignore the penalty for underpayment of estimated taxes.Assume she did not commit fraud.

Accepted Answer

Failure-to

Question 5

Identify which of the following statements is true.

Accepted Answer

A) A partnership is not required to file a return if the partnership has no income for the year. 
B) The "automatic" extension period for filing an individual return is five months. 
C) Individuals and corporations may obtain six-month extensions for paying taxes and filing their returns for the taxable year by filing the appropriate extension requests. 
D) All of the above are false. 
A) A partnership is not required to file a return if the partnership has no income for the year. 
B) The "automatic" extension period for filing an individual return is five months. 
C) Individuals and corporations may obtain six-month extensions for paying taxes and filing their returns for the taxable year by filing the appropriate extension requests. 
D) All of the above are false.

Question 6

Identify which of the following statements is false.

Accepted Answer

A) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B) If the taxpayer being audited does not concur with the proposed assessment,the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C) During the audit process,if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax),then the taxpayer is precluded from filing a refund suit. 
D) Interest on a deficiency accrues from the due date of the return through the payment date. 
A) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue. 
B) If the taxpayer being audited does not concur with the proposed assessment,the Service is required to send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process. 
C) During the audit process,if the taxpayer concurs with the assessment of tax by the IRS and signs Form 870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax),then the taxpayer is precluded from filing a refund suit. 
D) Interest on a deficiency accrues from the due date of the return through the payment date.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a reason for relief from the substantial understatement penalty?

Accepted Answer

A) disclosure of the relevant facts pertaining to the questionable tax return position 
B) substantial authority for the tax return position 
C) reliance on a tax return preparer 
D) reasonable cause and a good faith effort to comply with the tax law 
A) disclosure of the relevant facts pertaining to the questionable tax return position 
B) substantial authority for the tax return position 
C) reliance on a tax return preparer 
D) reasonable cause and a good faith effort to comply with the tax law

Question 9

The innocent spouse relief provision from tax liability covers all of the following except

Accepted Answer

A) improper deductions. 
B) improper credits. 
C) improper basis. 
D) All are understatements subject to minimum thresholds. 
A) improper deductions. 
B) improper credits. 
C) improper basis. 
D) All are understatements subject to minimum thresholds.

Question 10

The majority of the individual tax returns that are audited are selected under the DIF program.

Accepted Answer

A) True 
 B)False

Question 11

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 t

Question 12

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

Accepted Answer

The IRS is organized functionally into f

Question 13

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.

Question 14

Anyone who prepares a tax return is subject to the provisions of Circular 230.

Accepted Answer

A) True 
 B)False

Question 15

What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Accepted Answer

A) $50 
B) $250 
C) $5,000 
D) 20% of the understatement 
A) $50 
B) $250 
C) $5,000 
D) 20% of the understatement

Question 16

Identify which of the following statements is false.

Accepted Answer

A) If the phrase "Entered under Rule 155" appears at the end of the Tax Court's opinion,the litigating parties must jointly determine the additional tax due. 
B) A taxpayer does not have to pay the tax assessment before filing suit in a U.S.district court or the U.S.Court of Federal Claims. 
C) Either the taxpayer or the government can appeal the decision of a court of original jurisdiction to the next higher court with the potential for a final ruling from the U.S.Supreme Court if a writ of certiorari is granted. 
D) All of the above are false. 
A) If the phrase "Entered under Rule 155" appears at the end of the Tax Court's opinion,the litigating parties must jointly determine the additional tax due. 
B) A taxpayer does not have to pay the tax assessment before filing suit in a U.S.district court or the U.S.Court of Federal Claims. 
C) Either the taxpayer or the government can appeal the decision of a court of original jurisdiction to the next higher court with the potential for a final ruling from the U.S.Supreme Court if a writ of certiorari is granted. 
D) All of the above are false.

Question 17

The IRS audited the tax returns of Dan Jackson,a gifted painter.It contended that,between 2003 and 2005,Jackson received $500,000 for his paintings,but reported only $75,000.Jackson attributed the shortfall to his receipt of cash at art fairs and street fairs.He allegedly concealed the cash payments in separate bank accounts unbeknownst to his CPA.What tax compliance issues regarding the alleged underreporting are pertinent to the CPA?

Accepted Answer

Dan Jackson,his agent,and CPA (tax retur

Question 18

The "automatic" extension period for filing an individual return is seven months.

Accepted Answer

A) True 
 B)False

Question 19

The Internal Revenue Service is part of the

Accepted Answer

A) Congress. 
B) Treasury Department. 
C) Federal Bureau of Investigation. 
D) U)S.Customs Department. 
A) Congress. 
B) Treasury Department. 
C) Federal Bureau of Investigation. 
D) U)S.Customs Department.

Question 20

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 $

Identify which of the following statements is true.

A calendar-year individual taxpayer files last year's income tax return on October 17 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 $1,500 of tax.The late filing penalty is

Which of the following statements regarding Circular 230 is false?

Identify which of the following statements is true.

Identify which of the following statements is false.

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

Which of the following is not a reason for relief from the substantial understatement penalty?

The innocent spouse relief provision from tax liability covers all of the following except

The majority of the individual tax returns that are audited are selected under the DIF program.

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

Identify which of the following statements is true.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Identify which of the following statements is false.

The "automatic" extension period for filing an individual return is seven months.

The Internal Revenue Service is part of the

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?

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

Identify which of the following statements is true.

A calendar-year individual taxpayer files last year's income tax return on October 17 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 $1,500 of tax.The late filing penalty is

Which of the following statements regarding Circular 230 is false?

Identify which of the following statements is true.

Identify which of the following statements is false.

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

Which of the following is not a reason for relief from the substantial understatement penalty?

The innocent spouse relief provision from tax liability covers all of the following except

The majority of the individual tax returns that are audited are selected under the DIF program.

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

Identify which of the following statements is true.

Anyone who prepares a tax return is subject to the provisions of Circular 230.

What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Identify which of the following statements is false.

The "automatic" extension period for filing an individual return is seven months.

The Internal Revenue Service is part of the

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?

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