Question 1

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

Accepted Answer

A)  The penalty rate is 20%. 
B)  The penalty is imposed only on the part of the deficiency attributable to negligence. 
C)  The penalty applies only to intentional tax understatements by the taxpayer. 
D)  The penalty is waived if the taxpayer uses Form 8275 to disclose a return position that is reasonable though contrary to the IRS position. 
A)  The penalty rate is 20%. 
B)  The penalty is imposed only on the part of the deficiency attributable to negligence. 
C)  The penalty applies only to intentional tax understatements by the taxpayer. 
D)  The penalty is waived if the taxpayer uses Form 8275 to disclose a return position that is reasonable though contrary to the IRS position.

Question 2

In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction.

Accepted Answer

A) True 
 B)False

Question 3

Jenny prepared Steve's income tax returns for no compensation for 2008 and 2009. Jenny is Steve's mother. In 2011, the IRS notifies Steve that it will audit his returns for 2007-2009. If Steve so desires, Jenny may represent him during the audit of all three returns.

Accepted Answer

A) True 
 B)False

Question 4

Quon filed an amended return, claiming a $100,000 refund. The IRS disallowed the refund, and it can assess a penalty if there was no reasonable basis of support for the refund claim, in the amount of ____________________% of the disallowed amount.
or

Accepted Answer

The answer of Quon filed an amended return, claiming a...

Question 5

The client has decided to dispute the Revenue Agent's Report. What is the tax advisor's next step?

Accepted Answer

Carrying out a level of due di

Question 6

In taking a dispute to the Appeals Division, a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

Accepted Answer

The answer of In taking a dispute to the Appeals...

Question 7

A tax preparer cannot disclose to a mortgage banker the client's income level, or other information acquired by preparing the return, without the client's permission.

Accepted Answer

A) True 
 B)False

Question 8

Mickey, a calendar year taxpayer, filed a return correctly showing no Federal income tax liability for 2010. During 2011, his AGI is $120,000 and his tax liability is $20,000. To avoid a penalty for 2011, Mickey must make aggregate estimated tax payments of at least:

Accepted Answer

A)  $0. 
B)  $1,000 (minimum amount). 
C)  $18,000. 
D)  $20,000. 
A)  $0. 
B)  $1,000 (minimum amount). 
C)  $18,000. 
D)  $20,000.

Question 9

After the completion of an audit, the taxpayer has ____________________ days to petition the Tax Court to modify the proposed tax due.
or

Accepted Answer

The answer of After the completion of an audit, the...

Question 10

Circular 230 requires that a tax preparer be aware of changes in the tax law. Furthermore, office practices of the preparer must be up to industry standards.

Accepted Answer

A) True 
 B)False

Question 11

After a tax audit, the taxpayer receives the Revenue Agent's Report as part of the "90-day letter."

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is correct as to the conduct of IRS income tax audits?

Accepted Answer

A)  Office audits are conducted at the office of the IRS. 
B)  The most common type of Federal income tax audit is the field audit. 
C)  An office audit typically is used for a business taxpayer. 
D)  A correspondence audit usually is concluded after a meeting with the taxpayer at the IRS auditor's office. 
A)  Office audits are conducted at the office of the IRS. 
B)  The most common type of Federal income tax audit is the field audit. 
C)  An office audit typically is used for a business taxpayer. 
D)  A correspondence audit usually is concluded after a meeting with the taxpayer at the IRS auditor's office.

Question 13

Babs filed an amended return in 2011, claiming a refund relative to her 2009 tax computation. When the IRS approves the amended return, it will pay Babs interest with respect to the overpayment.

Accepted Answer

A) True 
 B)False

Question 14

During an audit, the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data..

Accepted Answer

The answer of During an audit, the IRS might require...

Question 15

Neither the taxpayer nor the government can appeal a decision of the Tax Court Small Cases Division.

Accepted Answer

A) True 
 B)False

Question 16

Juanita, who is subject to a 45% marginal gift tax rate, made a gift of a sculpture to Bianca, valuing the property at $150,000. The IRS later valued the gift at $300,000. The applicable undervaluation penalty is:

Accepted Answer

A)  $27,000. 
B)  $13,500. 
C)  $10,000 (maximum penalty). 
D)  $0. 
A)  $27,000. 
B)  $13,500. 
C)  $10,000 (maximum penalty). 
D)  $0.

Question 17

Margaurite did not pay her Federal income tax on time. When she eventually filed the return, she reported a balance due. Compute Margaurite's failure to file penalty in each of the following cases.

Accepted Answer

The failure to file penalty is

Question 18

The special tax penalty imposed on appraisers:

Accepted Answer

A)  Is waived if the taxpayer also was charged with his/her own valuation penalty. 
B)  Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return. 
C)  Equals 10% of the appraised value of the property, with a $5,000 minimum penalty. 
D)  Can be as much as 200% of the appraisal fee that was charged. 
A)  Is waived if the taxpayer also was charged with his/her own valuation penalty. 
B)  Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return. 
C)  Equals 10% of the appraised value of the property, with a $5,000 minimum penalty. 
D)  Can be as much as 200% of the appraisal fee that was charged.

Question 19

If a taxpayer is audited by the IRS and is unwilling to accept the findings of the agent, how does the taxpayer's audit strategy change when the dispute is taken to the IRS Appeals Division? Hint: What are the "hazards of litigation?"

Accepted Answer

The taxpayer may attempt to negotiate an

Question 20

Maria's AGI last year was $195,000. To avoid a penalty, her estimated tax payments and withholdings for this year must equal the lesser of ____________________ percent of last year's taxes or ____________________ percent of this year's taxes.
or

Accepted Answer

110, 90 on

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction.

Jenny prepared Steve's income tax returns for no compensation for 2008 and 2009. Jenny is Steve's mother. In 2011, the IRS notifies Steve that it will audit his returns for 2007-2009. If Steve so desires, Jenny may represent him during the audit of all three returns.

Quon filed an amended return, claiming a $100,000 refund. The IRS disallowed the refund, and it can assess a penalty if there was no reasonable basis of support for the refund claim, in the amount of ____________________% of the disallowed amount. or

The client has decided to dispute the Revenue Agent's Report. What is the tax advisor's next step?

In taking a dispute to the Appeals Division, a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

A tax preparer cannot disclose to a mortgage banker the client's income level, or other information acquired by preparing the return, without the client's permission.

Mickey, a calendar year taxpayer, filed a return correctly showing no Federal income tax liability for 2010. During 2011, his AGI is $120,000 and his tax liability is $20,000. To avoid a penalty for 2011, Mickey must make aggregate estimated tax payments of at least:

After the completion of an audit, the taxpayer has ____________________ days to petition the Tax Court to modify the proposed tax due. or

Circular 230 requires that a tax preparer be aware of changes in the tax law. Furthermore, office practices of the preparer must be up to industry standards.

After a tax audit, the taxpayer receives the Revenue Agent's Report as part of the "90-day letter."

Which of the following statements is correct as to the conduct of IRS income tax audits?

Babs filed an amended return in 2011, claiming a refund relative to her 2009 tax computation. When the IRS approves the amended return, it will pay Babs interest with respect to the overpayment.

During an audit, the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data..

Neither the taxpayer nor the government can appeal a decision of the Tax Court Small Cases Division.

Juanita, who is subject to a 45% marginal gift tax rate, made a gift of a sculpture to Bianca, valuing the property at $150,000. The IRS later valued the gift at $300,000. The applicable undervaluation penalty is:

Margaurite did not pay her Federal income tax on time. When she eventually filed the return, she reported a balance due. Compute Margaurite's failure to file penalty in each of the following cases.

The special tax penalty imposed on appraisers:

If a taxpayer is audited by the IRS and is unwilling to accept the findings of the agent, how does the taxpayer's audit strategy change when the dispute is taken to the IRS Appeals Division? Hint: What are the "hazards of litigation?"

Maria's AGI last year was $195,000. To avoid a penalty, her estimated tax payments and withholdings for this year must equal the lesser of percent of last year's taxes or percent of this year's taxes. or

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 17: Tax Practice and Ethics

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction.

Jenny prepared Steve's income tax returns for no compensation for 2008 and 2009. Jenny is Steve's mother. In 2011, the IRS notifies Steve that it will audit his returns for 2007-2009. If Steve so desires, Jenny may represent him during the audit of all three returns.

Quon filed an amended return, claiming a $100,000 refund. The IRS disallowed the refund, and it can assess a penalty if there was no reasonable basis of support for the refund claim, in the amount of ____________________% of the disallowed amount. or

The client has decided to dispute the Revenue Agent's Report. What is the tax advisor's next step?

In taking a dispute to the Appeals Division, a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

A tax preparer cannot disclose to a mortgage banker the client's income level, or other information acquired by preparing the return, without the client's permission.

Mickey, a calendar year taxpayer, filed a return correctly showing no Federal income tax liability for 2010. During 2011, his AGI is $120,000 and his tax liability is $20,000. To avoid a penalty for 2011, Mickey must make aggregate estimated tax payments of at least:

After the completion of an audit, the taxpayer has ____________________ days to petition the Tax Court to modify the proposed tax due. or

Circular 230 requires that a tax preparer be aware of changes in the tax law. Furthermore, office practices of the preparer must be up to industry standards.

After a tax audit, the taxpayer receives the Revenue Agent's Report as part of the "90-day letter."

Which of the following statements is correct as to the conduct of IRS income tax audits?

Babs filed an amended return in 2011, claiming a refund relative to her 2009 tax computation. When the IRS approves the amended return, it will pay Babs interest with respect to the overpayment.

During an audit, the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data..

Neither the taxpayer nor the government can appeal a decision of the Tax Court Small Cases Division.

Juanita, who is subject to a 45% marginal gift tax rate, made a gift of a sculpture to Bianca, valuing the property at $150,000. The IRS later valued the gift at $300,000. The applicable undervaluation penalty is:

Margaurite did not pay her Federal income tax on time. When she eventually filed the return, she reported a balance due. Compute Margaurite's failure to file penalty in each of the following cases.

The special tax penalty imposed on appraisers:

If a taxpayer is audited by the IRS and is unwilling to accept the findings of the agent, how does the taxpayer's audit strategy change when the dispute is taken to the IRS Appeals Division? Hint: What are the "hazards of litigation?"

Maria's AGI last year was $195,000. To avoid a penalty, her estimated tax payments and withholdings for this year must equal the lesser of ____________________ percent of last year's taxes or ____________________ percent of this year's taxes. or

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Maria's AGI last year was $195,000. To avoid a penalty, her estimated tax payments and withholdings for this year must equal the lesser of percent of last year's taxes or percent of this year's taxes. or