Question 1

The statute of limitations for the deduction of a worthless security is 5 years.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Accepted Answer

A) It directs taxpayers to other IRS publications with more details on specific taxpayer rights. 
B) It explains the examination, appeal, collection, and refund process. 
C) It states that a taxpayer is responsible for payment of only the correct amount of tax due, no more, no less. 
D) All of the above statements are correct. 
E) None of the above statements are correct. 
A) It directs taxpayers to other IRS publications with more details on specific taxpayer rights. 
B) It explains the examination, appeal, collection, and refund process. 
C) It states that a taxpayer is responsible for payment of only the correct amount of tax due, no more, no less. 
D) All of the above statements are correct. 
E) None of the above statements are correct.

Question 3

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Accepted Answer

A) True 
 B)False

Question 4

Stephanie has taxable income of $48,200 and a tax liability of $7,828. If Stephanie's income increases by $4,000, her tax liability will be $8,828.
​
a.What is her average tax rate on the $48,200 of income?
b.What is her marginal tax rate?

Accepted Answer

a. 16.2%, calculated

Question 5

Tax return preparers must enter the annual filing season program (AFSP).

Accepted Answer

A) True 
 B)False

Question 6

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).
​

Accepted Answer

The answer of For each of the following situations, indicate...

Question 7

Kendall is considering the purchase of a home. He has saved $22,000 for a down payment on a home and will finance the remainder of the purchase price with a home mortgage loan. Kendall currently rents an apartment for $1,200 per month and does not anticipate an increase in his monthly income. He wants to make sure that the monthly payment on his new home does not exceed $1,200, after-tax. Kendall has a marginal tax rate of 25 percent and an average tax rate of 22 percent. Assuming the monthly mortgage payment (before-tax) will be equal to 1 percent of the initial mortgage balance and the entire amount of each monthly payment will be deductible home mortgage interest, what is the maximum amount that Kendall can spend on a new home?

Accepted Answer

$182,000, determined as $22,000 down pay

Question 8

At which of the following IRS locations are tax returns processed?

Accepted Answer

A) Regional offices 
B) IRS Campus Processing Sites 
C) Local offices 
D) National office 
E) None of the above 
A) Regional offices 
B) IRS Campus Processing Sites 
C) Local offices 
D) National office 
E) None of the above

Question 9

The IRS may issue a summons for a taxpayer's bank account records.

Accepted Answer

A) True 
 B)False

Question 10

Linda filed her individual income tax return on its due date, but failed to pay $1,000 in taxes that were due with the return. Linda promptly paid the taxes upon receipt of a notice and demand for payment. If Linda pays the taxes exactly 5 months late, calculate the amount of her failure-to-pay penalty.

Accepted Answer

$25 = $1,0

Question 11

Which category of tax preparers may represent their clients in only the most limited situations in front of the IRS?

Accepted Answer

A) Enrolled Agents 
B) Preparers enrolled only in the Annual Filing Season Program 
C) Attorneys 
D) CPAs 
A) Enrolled Agents 
B) Preparers enrolled only in the Annual Filing Season Program 
C) Attorneys 
D) CPAs

Question 12

​Which of the following is not a characteristic around which tax planning is organized:

Accepted Answer

A) Jurisdiction​ 
B) ​Timing 
C) ​Entity 
D) ​Character 
E) ​All of the above 
A) Jurisdiction​ 
B) ​Timing 
C) ​Entity 
D) ​Character 
E) ​All of the above

Question 13

Mike deducts a bad debt on his 2016 tax return. How many years is the statute of limitations for the bad debt deduction?

Accepted Answer

A) Zero 
B) 3 years 
C) 6 years 
D) 7 years 
E) No limit 
A) Zero 
B) 3 years 
C) 6 years 
D) 7 years 
E) No limit

Question 14

Taxpayers are required by law to maintain records to facilitate an IRS audit.

Accepted Answer

A) True 
 B)False

Question 15

Tax penalties are not deductible by taxpayers.

Accepted Answer

A) True 
 B)False

Question 16

Indicate the date that the statute of limitations would run out on the following situations:
​
a.The IRS assesses additional taxes for a 2014 tax return audit on May 5, 2016.How long does the IRS have to collect the tax?
b.On April 1, 2016, the IRS asks for and the taxpayer agrees to an additional year to complete an audit for a 2012 tax return which was filed on March 9, 2013.
c.Jeremy reported $10,000 of worthless debt on his 2015 tax return which he filed on August 3, 2016.
d.Jenny files her 2016 tax return on February 25, 2017.
e.James omits 7 percent of his income on his 2014 tax return which he filed on July 12, 2015.

Accepted Answer

a. May 5, 2026
b. April 1, 201

Question 17

Which of the following is the calculation of the failure-to-file penalties?

Accepted Answer

A) Half of 1 percent (0.5 percent) of the tax due for each month late, limited to 25 percent of the taxes due 
B) 5 percent of the tax due for each quarter late, limited to 25 percent of the taxes due 
C) 5 percent of the tax due for each month or part of the month that it is late, limited to 25 percent of the taxes due 
D) 20 percent of the tax due 
E) 5 percent of the tax due 
A) Half of 1 percent (0.5 percent) of the tax due for each month late, limited to 25 percent of the taxes due 
B) 5 percent of the tax due for each quarter late, limited to 25 percent of the taxes due 
C) 5 percent of the tax due for each month or part of the month that it is late, limited to 25 percent of the taxes due 
D) 20 percent of the tax due 
E) 5 percent of the tax due

Question 18

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a penalty?

Accepted Answer

The penalty for failure to fil

Question 19

Craig commits fraud on his tax return. It is found that he was $40,000 deficient in his tax because of the fraud. What would his penalty be?

Accepted Answer

A) $500 
B) $30,000 
C) $40,000 
D) $0 
A) $500 
B) $30,000 
C) $40,000 
D) $0

Question 20

Which of the following is the best definition of tax planning?

Accepted Answer

A) Preparing a client's tax return 
B) Planning taxpayers' financial affairs in an effort to minimize tax liability 
C) Planning taxpayers' financial affairs to find the best way to avoid tax by successfully bending tax law 
D) Researching complex tax issues 
E) None of the above are considered tax planning 
A) Preparing a client's tax return 
B) Planning taxpayers' financial affairs in an effort to minimize tax liability 
C) Planning taxpayers' financial affairs to find the best way to avoid tax by successfully bending tax law 
D) Researching complex tax issues 
E) None of the above are considered tax planning

The statute of limitations for the deduction of a worthless security is 5 years.

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Stephanie has taxable income of $48,200 and a tax liability of $7,828. If Stephanie's income increases by $4,000, her tax liability will be $8,828. a.What is her average tax rate on the $48,200 of income? b.What is her marginal tax rate?

Tax return preparers must enter the annual filing season program (AFSP).

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).

At which of the following IRS locations are tax returns processed?

The IRS may issue a summons for a taxpayer's bank account records.

Which category of tax preparers may represent their clients in only the most limited situations in front of the IRS?

Which of the following is not a characteristic around which tax planning is organized:

Mike deducts a bad debt on his 2016 tax return. How many years is the statute of limitations for the bad debt deduction?

Taxpayers are required by law to maintain records to facilitate an IRS audit.

Tax penalties are not deductible by taxpayers.

Which of the following is the calculation of the failure-to-file penalties?

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a penalty?

Craig commits fraud on his tax return. It is found that he was $40,000 deficient in his tax because of the fraud. What would his penalty be?

Which of the following is the best definition of tax planning?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

The statute of limitations for the deduction of a worthless security is 5 years.

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Stephanie has taxable income of $48,200 and a tax liability of $7,828. If Stephanie's income increases by $4,000, her tax liability will be $8,828. ​ a.What is her average tax rate on the $48,200 of income? b.What is her marginal tax rate?

Tax return preparers must enter the annual filing season program (AFSP).

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties). ​

At which of the following IRS locations are tax returns processed?

The IRS may issue a summons for a taxpayer's bank account records.

Which category of tax preparers may represent their clients in only the most limited situations in front of the IRS?

​Which of the following is not a characteristic around which tax planning is organized:

Mike deducts a bad debt on his 2016 tax return. How many years is the statute of limitations for the bad debt deduction?

Taxpayers are required by law to maintain records to facilitate an IRS audit.

Tax penalties are not deductible by taxpayers.

Which of the following is the calculation of the failure-to-file penalties?

A taxpayer made estimated tax payments in excess of the tax due for the year, but failed to file a tax return. Since the taxes were paid in full, would there be a penalty?

Craig commits fraud on his tax return. It is found that he was $40,000 deficient in his tax because of the fraud. What would his penalty be?

Which of the following is the best definition of tax planning?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters

Stephanie has taxable income of $48,200 and a tax liability of $7,828. If Stephanie's income increases by $4,000, her tax liability will be $8,828. a.What is her average tax rate on the $48,200 of income? b.What is her marginal tax rate?

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).

Which of the following is not a characteristic around which tax planning is organized: