Exam 26: Tax Practice and Ethics

Latrelle prepares the tax return for Whitehall Corporation.Latrelle includes a $5,000 deduction on the return.This type of deduction previously has been disallowed by the Tax Court,although there is a 15% chance that the holding will be reversed on an appeal.The return does not make any special disclosure that the deduction is being claimed.Whitehall paid Latrelle a fee of $3,000 for preparing the Form 1120.Latrelle will be assessed a preparer penalty of $1,000 for taking an unreasonable position on the Whitehall return.

Under Circular 230,a return must be signed as a preparer,even if it was completed for no charge as a favor to a friend or relative.

A C corporation is not subject to an underpayment penalty until more than $____________________ is due and unpaid through estimated taxes.

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

With respect to the audit process,which statement is correct?

The rules of Circular 230 need not be followed by:

With respect to the audit process,which of the following statements is incorrect?

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

List several current initiatives that the IRS has undertaken in its effort to enforce the revenue laws of the U.S.

Gloria,a calendar year taxpayer subject to a 35% marginal income tax rate,claimed a charitable contribution deduction of $800,000 for a sculpture that the IRS later valued at $100,000.The applicable overvaluation penalty is:

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

The Statements on Standards for Tax Services are issued by the:

George,a calendar year taxpayer subject to a 45% marginal gift tax rate,made a gift of a sculpture to Redd,valuing the property at $100,000.The IRS later valued the gift at $140,000.The applicable undervaluation penalty is:

A tax preparer cannot disclose to a mortgage banker the client's income level,or other information acquired by preparing the return,without the client's permission.

To file for a tax refund,a C corporation generally uses Form ____________________.