Question 1

In the case of bad debts and worthless securities,the statute of limitations on claims for refund is three years.

Accepted Answer

A) True 
 B)False  False

Question 2

The penalty for substantial understatement of tax liability does not apply if:

Accepted Answer

A) The taxpayer has substantial authority for the treatment taken on the tax return. 
B) The relevant facts affecting the treatment are adequately disclosed in the return or on Form 8275. 
C) The IRS failed to meet its burden of proof in showing the taxpayer's error. 
D) All of the above statements are correct. 
A) The taxpayer has substantial authority for the treatment taken on the tax return. 
B) The relevant facts affecting the treatment are adequately disclosed in the return or on Form 8275. 
C) The IRS failed to meet its burden of proof in showing the taxpayer's error. 
D) All of the above statements are correct. D

Question 3

Troy Center Ltd.withheld from its employees' paychecks $200,000 in Federal income and Social Security taxes for the Monday,June 30 payroll.It then spent the $200,000 on equipment upgrades,missing altogether the July 2 due date for the tax remittances.How much does Troy now owe the government in taxes and penalties? Ignore interest accruals,and assume that the Treasury can prove that Troy's redirecting of the tax withholdings was willful.

Accepted Answer

Payroll withholdings of $100,000 or more must be deposited by the employer by the close of the next banking day.Troy's withholdings are delinquent as of July 2.Reg.§ 31.6302-1(c)(3)
A $200,000 (100% of undeposited taxes) penalty is due from Troy.In addition to criminal penalties that may apply,Troy still owes the $200,000 undeposited tax plus other amounts.Interest computations will accrue.But other penalties,like those for negligence or fraud,do not apply when the 100% penalty is due.§ 6672(a)
The IRS alternatively can assess these underpayments of Troy and all of its "responsible persons," typically corporate officers and directors.Consequently,this is not an effective way to borrow money for capital improvements.

Question 4

Recently,the overall Federal income tax audit rate for the Form 1040 has been under 1%.

Accepted Answer

A) True 
 B)False

Question 5

The AICPA's Statements on Standards for Tax Services provide principles-based guidelines as to how a tax professional should conduct business.

Accepted Answer

A) True 
 B)False

Question 6

Chung's AGI last year was $180,000.Her Federal income tax came to $45,000,which she paid through a combination of withholding and estimated payments.This year,her AGI will be $250,000,with a projected tax liability of $60,000,all to be paid through estimates.Ignore the annualized income method.Compute Chung's quarterly estimated payment schedule for this year.

Accepted Answer

Current-Year Method
​
​
​
 @#IMG-DLM& Prior-Year M

Question 7

​Young-Eagle files her 2018 Form 1040 on March 1,2019.The Federal tax statute of limitations for this return expires on:

Accepted Answer

A) ​March 1, 2022. 
B) ​April 15, 2022. 
C) ​April 15, 2025. 
D) ​April 15, 2026. 
A) ​March 1, 2022. 
B) ​April 15, 2022. 
C) ​April 15, 2025. 
D) ​April 15, 2026.

Question 8

According to the IRS,the annual "Tax Gap" totals over $______________________ billion.

Accepted Answer

​
400
​
fo

Question 9

A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to comply with the tax law.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) A C corporation must make estimated payments if its Federal income tax liability for the year will exceed $250. 
B) The due dates of the payments for a calendar-year C corporation are March, June, September, and December 15. 
C) A C corporation's estimates must total at least 90% of the current-year tax, to avoid the penalty. 
D) An individual must make estimated payments if his or her balance due for the Federal income tax for the year will exceed $1,000. 
A) A C corporation must make estimated payments if its Federal income tax liability for the year will exceed $250. 
B) The due dates of the payments for a calendar-year C corporation are March, June, September, and December 15. 
C) A C corporation's estimates must total at least 90% of the current-year tax, to avoid the penalty. 
D) An individual must make estimated payments if his or her balance due for the Federal income tax for the year will exceed $1,000.

Question 11

Silvio,a cash basis,calendar year taxpayer,filed his income tax return 75 days after the due date.Silvio never extended his return,and with the return he paid the full amount of taxes that were due.What penalties will Silvio incur,and how much is the penalty if his additional tax is $5,000? Disregard any additional interest he must pay.

Accepted Answer

The penalties cannot

Question 12

CPA Norma and her client Colin hold a privilege of confidentiality from the IRS,as to their tax planning discussions about completing Colin's tax returns.The IRS cannot successfully subpoena records concerning these discussions.

Accepted Answer

A) True 
 B)False

Question 13

A CPA,an attorney,and a(n) ____________________ can represent taxpayers before the IRS in an Appeals conference.

Accepted Answer

The answer of A CPA,an attorney,and a(n) ____________________ can represent...

Question 14

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.

Accepted Answer

3,6,7
thre

Question 15

A taxpayer can take a dispute to the ____________________ Division of the Tax Court when the disputed amounts do not exceed $50,000.

Accepted Answer

The answer of A taxpayer can take a dispute to...

Question 16

A tax professional needs to know how the IRS is structured and how it works to carry out its mission.Evaluate this statement.

Accepted Answer

The tax practitioner

Question 17

For purposes of tax penalties,a VITA volunteer is not classified as a tax return ____________________.

Accepted Answer

The answer of For purposes of tax penalties,a VITA volunteer...

Question 18

The tax penalty imposed on appraisers:

Accepted Answer

A) Can be as much as 200% of the appraisal fee that was charged. 
B) Is waived if the taxpayer also was charged with his/her own valuation penalty. 
C) Equals 25% of the appraised value of the property, with a $10,000 minimum penalty. 
D) Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return. 
A) Can be as much as 200% of the appraisal fee that was charged. 
B) Is waived if the taxpayer also was charged with his/her own valuation penalty. 
C) Equals 25% of the appraised value of the property, with a $10,000 minimum penalty. 
D) Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter.
a.Taxpayer penalty
b.Tax preparer penalty
c.Appraiser's penalty
-Misstatement of withholding allowances.

Accepted Answer

The answer of Match each of the following tax penalties...

Exam 26: Tax Practice and Ethics

In the case of bad debts and worthless securities,the statute of limitations on claims for refund is three years.

The penalty for substantial understatement of tax liability does not apply if:

Recently,the overall Federal income tax audit rate for the Form 1040 has been under 1%.

The AICPA's Statements on Standards for Tax Services provide principles-based guidelines as to how a tax professional should conduct business.

​Young-Eagle files her 2018 Form 1040 on March 1,2019.The Federal tax statute of limitations for this return expires on:

According to the IRS,the annual "Tax Gap" totals over $______________________ billion.

A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to comply with the tax law.

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

CPA Norma and her client Colin hold a privilege of confidentiality from the IRS,as to their tax planning discussions about completing Colin's tax returns.The IRS cannot successfully subpoena records concerning these discussions.

A CPA,an attorney,and a(n) ____________________ can represent taxpayers before the IRS in an Appeals conference.

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.

A taxpayer can take a dispute to the ____________________ Division of the Tax Court when the disputed amounts do not exceed $50,000.

A tax professional needs to know how the IRS is structured and how it works to carry out its mission.Evaluate this statement.

For purposes of tax penalties,a VITA volunteer is not classified as a tax return ____________________.

The tax penalty imposed on appraisers:

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

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. a.Taxpayer penalty b.Tax preparer penalty c.Appraiser's penalty -Misstatement of withholding allowances.

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Young-Eagle files her 2018 Form 1040 on March 1,2019.The Federal tax statute of limitations for this return expires on:

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.