Exam 26: Tax Practice and Ethics

Describe the potential outcomes to a party who provides information to the IRS under the informant or whistleblower program.

Juanita, who is subject to a 35% 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:

The general statute of limitations regarding Federal tax returns extends for ____________________ years.It is ____________________ years if a substantial understatement of income is found, and ____________________ years with respect to worthless securities. or

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

A taxpayer's return might be selected for audit on the basis of the ____________________ score that the IRS computes.

In a criminal fraud case, the burden is on the taxpayer to show that he or she was innocent "beyond the shadow of any reasonable doubt."

A taxpayer penalty may be waived if there is shown to be reasonable cause for the misstatement on the tax return. The courts have applied this standard strictly. List three or more assertions for a waiver of a taxpayer penalty that courts have found not to constitute reasonable cause. Example: Ignorance of the tax law.