Exam 26: Tax Practice and Ethics

Gadsden, who is subject to a 35% marginal gift tax rate, made a gift of a sculpture to Marvin, valuing the property at $150,000.The IRS later valued the gift at $400,000.The applicable undervaluation penalty is:

The IRS can pay an informant's fee of up to ____________________% of the recovered tax, interest, and penalty amounts.The reward can be as high as ____________________% for information provided by a "whistle blower." or

During an audit, IRS personnel might request a(n) ____________________ from the IRS National Office, to clarify the application of tax law concerning a tax deduction.

A(n) ___________________ member is required to follow the Statements of Standards for Tax Services in conducting a tax practice.

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

A taxpayer can be subject to both ____________________ and ____________________ penalties for tax misconduct. or

When a "prompt assessment" of the tax liability is requested, the taxpayer essentially is volunteering for an IRS audit of the tax return.

During any month in which both the failure-to-file and failure-to-pay penalties apply, both penalties must be paid in full.

Loren Ltd., a calendar year taxpayer, had the following transactions, all of which were properly reported on a timely filed return.Presuming the absence of fraud, how much of an omission from gross income must occur for Loren before the six-year statute of limitations applies? Show your computations.

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

A ____________________% penalty may result when a taxpayer overstates by 150% or more the value of an asset contributed to a charity. or

Compute the undervaluation penalty for each of the following independent cases involving the executor's reporting of the value of a closely held business in the decedent's gross estate.In each case, assume a marginal estate tax rate of 45%.

The special tax penalty imposed on appraisers:

A CPA and his/her client hold a privilege of confidentiality from the IRS, as to their discussions about completing a tax return.

The IRS processes about ____________________ million individual tax returns every year, about ____________________ million of which are filed electronically.

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

Which of the following is subject to tax return preparer penalties?

Vera is audited by the IRS for three tax years.Her returns were prepared by the following parties, to each of whom Vera paid a professional fee. Vera wants help in appearing before the IRS Revenue Agent for the audit. Which of the following statements is correct?

Minnie, your tax client, has decided to dispute the Revenue Agent's Report.List and discuss at least four of your "next steps" as you prepare to represent Minnie concerning her tax issue within the IRS and in the courts.

An IRS letter ruling might determine that an employee's compensation is unreasonable in amount.