Question 1

After a tax audit,the taxpayer receives the Revenue Agent's Report and a "30-day letter."

Accepted Answer

A) True 
 B)False

Question 2

The IRS uses document matching programs to keep the audit rate low.

Accepted Answer

A) True 
 B)False

Question 3

The IRS can pay an informant's fee of up to ____________________% of the recovered tax,interest,and penalty amounts.In the typical year,about ____________________ such rewards are paid.The reward can be as high as __________% for information provided by a "whistle blower."

Accepted Answer

The answer of The IRS can pay an informant's fee...

Question 4

As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

Accepted Answer

A) True 
 B)False

Question 5

How is the tax law affected by Federal criminal statutes?

Accepted Answer

A series of criminal penalties are asses

Question 6

The Statements on Standards for Tax Services apply to members of the AICPA.

Accepted Answer

A) True 
 B)False

Question 7

CPA Jennifer has heard about the AICPA's Statements on Standards for Tax Services.Although Jennifer is a licensed CPA in her state,she is not a member of the AICPA.How do the Statements affect Jennifer's tax practice?

Accepted Answer

The Statements are enforceable standards

Question 8

Why should the tax practitioner study the workings of the IRS?

Accepted Answer

The tax practitioner

Question 9

In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

Accepted Answer

The defenses to the

Question 10

Debbie,a calendar year taxpayer,did not file a tax return for 2004 because she honestly believed that no additional tax was due.In 2010,Debbie is audited by the IRS and the agent assesses a deficiency of $7,000 for tax year 2004.Debbie need not pay this deficiency,since the statute of limitations expired on April 15,2008.

Accepted Answer

A) True 
 B)False

Question 11

A tax preparer is in violation of Circular 230 if he or she:

Accepted Answer

A) Files a tax return that includes a math error. 
B) Does not sign the tax return that is prepared as a favor for a relative. 
C) Charges a fee to prepare an original Form 1120 equal to one-third of the taxpayer's refund due. 
D) Fails to inform the IRS of an error on the client's prior-year return. 
E) All of the above are Circular 230 violations. 
A) Files a tax return that includes a math error. 
B) Does not sign the tax return that is prepared as a favor for a relative. 
C) Charges a fee to prepare an original Form 1120 equal to one-third of the taxpayer's refund due. 
D) Fails to inform the IRS of an error on the client's prior-year return. 
E) All of the above are Circular 230 violations.

Question 12

The Code's scope of privileged communications for a CPA extends only to ____________________ advice given.

Accepted Answer

The answer of The Code's scope of privileged communications for...

Question 13

A CPA cannot take a tax return position for a client that is contrary to current IRS interpretations of the law.

Accepted Answer

A) True 
 B)False

Question 14

Failure to file and failure to pay penalties can be reduced if the taxpayer shows ____________________ for the omission.

Accepted Answer

The answer of Failure to file and failure to pay...

Question 15

Describe the following written determinations that are issued by the IRS.

Accepted Answer

The answer of Describe the following written determinations that are...

Question 16

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. 
E) None 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. 
E) None of the above statements are correct.

Question 17

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 18

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

Accepted Answer

The answer of A(n)___________________ member is required to follow the...

Question 19

The IRS need not pay the taxpayer interest on a refund if the IRS' payment is made within ____________________ days of the due date of a timely filed return.

Accepted Answer

The answer of The IRS need not pay the taxpayer...

Question 20

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

Accepted Answer

A) In certain situations,the IRS will not issue a ruling. 
B) Some letter rulings are of such importance and general interest that they are later published (in anonymous form)as Revenue Rulings. 
C) Letter rulings benefit both taxpayers and the IRS. 
D) Letter rulings are private and are not open to public inspection. 
A) In certain situations,the IRS will not issue a ruling. 
B) Some letter rulings are of such importance and general interest that they are later published (in anonymous form)as Revenue Rulings. 
C) Letter rulings benefit both taxpayers and the IRS. 
D) Letter rulings are private and are not open to public inspection.

Exam 26: Tax Practice and Ethics

After a tax audit,the taxpayer receives the Revenue Agent's Report and a "30-day letter."

The IRS uses document matching programs to keep the audit rate low.

The IRS can pay an informant's fee of up to ____________________% of the recovered tax,interest,and penalty amounts.In the typical year,about ____________________ such rewards are paid.The reward can be as high as __________% for information provided by a "whistle blower."

As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

How is the tax law affected by Federal criminal statutes?

The Statements on Standards for Tax Services apply to members of the AICPA.

CPA Jennifer has heard about the AICPA's Statements on Standards for Tax Services.Although Jennifer is a licensed CPA in her state,she is not a member of the AICPA.How do the Statements affect Jennifer's tax practice?

Why should the tax practitioner study the workings of the IRS?

In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

A tax preparer is in violation of Circular 230 if he or she:

The Code's scope of privileged communications for a CPA extends only to ____________________ advice given.

A CPA cannot take a tax return position for a client that is contrary to current IRS interpretations of the law.

Failure to file and failure to pay penalties can be reduced if the taxpayer shows ____________________ for the omission.

Describe the following written determinations that are issued by the IRS.

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

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

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

The IRS need not pay the taxpayer interest on a refund if the IRS' payment is made within ____________________ days of the due date of a timely filed return.

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

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

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

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

The IRS can pay an informant's fee of up to __________% of the recovered tax,interest,and penalty amounts.In the typical year,about such rewards are paid.The reward can be as high as % for information provided by a "whistle blower."