Question 1

The Statements on Standards for Tax Services apply to members of the AICPA,a state bar association,and all Enrolled Agents.

Accepted Answer

A) True 
 B)False

Question 2

​Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Accepted Answer

A) ​Negligence. 
B) ​Underpayment of estimated taxes 
C) ​Civil tax fraud. 
D) ​Criminal tax fraud. 
A) ​Negligence. 
B) ​Underpayment of estimated taxes 
C) ​Civil tax fraud. 
D) ​Criminal tax fraud.

Question 3

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

Accepted Answer

The answer of A ____________________% penalty may result when the...

Question 4

CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party.AICPA tax ethics rules require that an amended return immediately be filed,as political expenditures are not deductible.

Accepted Answer

A) True 
 B)False

Question 5

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

Accepted Answer

Carole might be reacting to the general

Question 6

An IRS "office audit" takes place at the headquarters office of the corporate taxpayer.

Accepted Answer

A) True 
 B)False

Question 7

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used.
a.Ignorance of the tax law
b.Reasonable basis
c.Reasonable cause
d.Complexity of the tax law
e.Substantial authority
f.Disclosure on return
-Negligence in filing a return.

Accepted Answer

The answer of For each of the indicated tax penalties,...

Question 8

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 applies whenever the taxpayer takes a return position that is contrary to a court decision. 
C) The penalty applies when the taxpayer does not keep records adequate to compute the tax correctly. 
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 applies whenever the taxpayer takes a return position that is contrary to a court decision. 
C) The penalty applies when the taxpayer does not keep records adequate to compute the tax correctly. 
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 9

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

Accepted Answer

The answer of A taxpayer's return might be selected for...

Question 10

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Accepted Answer

The answer of The Treasury document regulating the professional conduct...

Question 11

Which statement does not correctly describe the IRS letter ruling process?

Accepted Answer

A) Letter rulings can benefit both taxpayers and the IRS. 
B) Letter rulings are issued by the Secretary of the Treasury Department. 
C) Letter rulings can be seen only by the taxpayer who requested the ruling; they are also known as "private letter rulings." 
D) Some letter rulings are of such importance and general interest that they are later published (in anonymous form) as Revenue Rulings. 
A) Letter rulings can benefit both taxpayers and the IRS. 
B) Letter rulings are issued by the Secretary of the Treasury Department. 
C) Letter rulings can be seen only by the taxpayer who requested the ruling; they are also known as "private letter rulings." 
D) Some letter rulings are of such importance and general interest that they are later published (in anonymous form) as Revenue Rulings.

Question 12

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

Accepted Answer

A) Meredith is the director of Federal taxes for a C corporation. 
B) Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program. 
C) Abbie prepares her mother's tax returns for $50 a year. A CPA, Abbie would charge a client $750 for completing a similar return. 
D) Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies. 
A) Meredith is the director of Federal taxes for a C corporation. 
B) Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program. 
C) Abbie prepares her mother's tax returns for $50 a year. A CPA, Abbie would charge a client $750 for completing a similar return. 
D) Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies.

Question 13

When a tax issue is taken to court,the burden of proof is on the IRS to show that its audit adjustments are correct.

Accepted Answer

A) True 
 B)False

Question 14

The IRS is one of the largest Federal agencies,employing almost ____________________ people throughout the year.

Accepted Answer

The answer of The IRS is one of the largest...

Question 15

The government can appeal a decision of the Tax Court Small Cases Division,but the taxpayer cannot.

Accepted Answer

A) True 
 B)False

Question 16

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 that...

Question 17

A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a ____________________ for the taxpayer's position.

Accepted Answer

The answer of A negligence penalty can be waived if...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

​Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

Accepted Answer

A) ​100 percent. 
B) ​More than 85 percent. 
C) ​About 50 percent. 
D) ​Less than 20 percent. 
A) ​100 percent. 
B) ​More than 85 percent. 
C) ​About 50 percent. 
D) ​Less than 20 percent.

Question 20

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Accepted Answer

A) True 
 B)False

Exam 26: Tax Practice and Ethics

The Statements on Standards for Tax Services apply to members of the AICPA,a state bar association,and all Enrolled Agents.

​Keshawn can state "the tax law confused me" to avoid a tax penalty for:

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party.AICPA tax ethics rules require that an amended return immediately be filed,as political expenditures are not deductible.

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

An IRS "office audit" takes place at the headquarters office of the corporate taxpayer.

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

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

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Which statement does not correctly describe the IRS letter ruling process?

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

When a tax issue is taken to court,the burden of proof is on the IRS to show that its audit adjustments are correct.

The IRS is one of the largest Federal agencies,employing almost ____________________ people throughout the year.

The government can appeal a decision of the Tax Court Small Cases Division,but the taxpayer cannot.

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

A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a ____________________ for the taxpayer's position.

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

​Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

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

Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is: