Question 1

With respect to the Small Cases Division of the Tax Court,

Accepted Answer

A)  The taxpayer (but not the IRS) can appeal a contrary judgment. 
B)  The IRS (but not the taxpayer) can appeal a contrary judgment. 
C)  Either the IRS or the taxpayer can appeal a contrary judgment. 
D)  Neither the IRS nor the taxpayer can appeal a contrary judgment. 
A)  The taxpayer (but not the IRS) can appeal a contrary judgment. 
B)  The IRS (but not the taxpayer) can appeal a contrary judgment. 
C)  Either the IRS or the taxpayer can appeal a contrary judgment. 
D)  Neither the IRS nor the taxpayer can appeal a contrary judgment.

Question 2

Jaime's negligence penalty will be waived, under the reasonable cause exception. He told the court, "My taxes were wrong because I couldn't understand the tax law."

Accepted Answer

A) True 
 B)False

Question 3

The ________________ , a presidential appointee, is the "IRS's attorney."

Accepted Answer

The answer of The ________________ , a presidential appointee, is...

Question 4

Michelle, a calendar year taxpayer subject to a 24% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $275,000 for a sculpture that the IRS later valued at $200,000. The applicable overvaluation penalty is:

Accepted Answer

A)  $0. 
B)  $3,600. 
C)  $7,200. 
D)  $18,000. 
A)  $0. 
B)  $3,600. 
C)  $7,200. 
D)  $18,000.

Question 5

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 6

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 7

As part of a tax return engagement for XYZ Partnership, Enrolled Agent Wang can draft an amendment to the XYZ partnership agreement.

Accepted Answer

A) True 
 B)False

Question 8

The "IRS's attorney" is known as the Chief Counsel.

Accepted Answer

A) True 
 B)False

Question 9

Attorneys are allowed an "attorney-client privilege" of confidentiality with clients. Does a CPA tax preparer enjoy the same privilege? On which types of tax and financial work?

Accepted Answer

A limited confidentiality privilege is g

Question 10

Cheng filed an amended return this year, claiming a refund relative to her tax computation on a prior-year's return.
When the IRS approves the amended return and issues the refund, it also pays Cheng interest with respect to the overpayment.

Accepted Answer

A) True 
 B)False

Question 11

This official does not report directly to the IRS Commissioner.

Accepted Answer

A)  Treasury Secretary. 
B)  National Taxpayer Advocate. 
C)  Director of the Whistleblower Office. 
D)  Chief Appeals Officer. 
A)  Treasury Secretary. 
B)  National Taxpayer Advocate. 
C)  Director of the Whistleblower Office. 
D)  Chief Appeals Officer.

Question 12

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
-Substantial understatement of a tax.

Accepted Answer

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

Question 13

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...

Question 14

Malik, Inc., a calendar year C corporation subject to a 21% marginal income tax rate, claimed a Form 1120 charitable contribution deduction of $30,000 for a sculpture that the IRS later valued at $10,000. The applicable overvaluation penalty is:

Accepted Answer

A)  $0. 
B)  $4,200. 
C)  $10,000 (minimum penalty). 
D)  $20,000. 
A)  $0. 
B)  $4,200. 
C)  $10,000 (minimum penalty). 
D)  $20,000.

Question 15

Juanita, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Bianca, valuing the property at $150,000. The IRS later valued the gift at $300,000. The applicable undervaluation penalty is:

Accepted Answer

A)  $24,000. 
B)  $12,000. 
C)  $10,000 (maximum penalty). 
D)  $0. 
A)  $24,000. 
B)  $12,000. 
C)  $10,000 (maximum penalty). 
D)  $0.

Question 16

The IRS targets high-income individuals for an audit rate that is much higher than that of the general populace.

Accepted Answer

A) True 
 B)False

Question 17

In preparing a tax return, a CPA should verify "to the penny" every item of information submitted by a client about its deduction for repairs and maintenance.

Accepted Answer

A) True 
 B)False

Question 18

IRS computers use document matching programs for both individuals and business taxpayers to keep the audit rate low.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

The defenses to the imposition of the pe

Question 20

Evaluate this statement: a taxpayer is liable not only for tax penalties as described in the tax Code and Regulations.
Sanctions elsewhere in Federal law, such as in the criminal code, also apply in a tax dispute.

Accepted Answer

A series of criminal penalties are asses

Exam 26: Tax Practice and Ethics

With respect to the Small Cases Division of the Tax Court,

Jaime's negligence penalty will be waived, under the reasonable cause exception. He told the court, "My taxes were wrong because I couldn't understand the tax law."

The ________________ , a presidential appointee, is the "IRS's attorney."

Michelle, a calendar year taxpayer subject to a 24% marginal Federal income tax rate, claimed a Form 1040 charitable contribution deduction of $275,000 for a sculpture that the IRS later valued at $200,000. The applicable overvaluation penalty is:

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

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

As part of a tax return engagement for XYZ Partnership, Enrolled Agent Wang can draft an amendment to the XYZ partnership agreement.

The "IRS's attorney" is known as the Chief Counsel.

Attorneys are allowed an "attorney-client privilege" of confidentiality with clients. Does a CPA tax preparer enjoy the same privilege? On which types of tax and financial work?

Cheng filed an amended return this year, claiming a refund relative to her tax computation on a prior-year's return. When the IRS approves the amended return and issues the refund, it also pays Cheng interest with respect to the overpayment.

This official does not report directly to the IRS Commissioner.

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 -Substantial understatement of a tax.

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

Malik, Inc., a calendar year C corporation subject to a 21% marginal income tax rate, claimed a Form 1120 charitable contribution deduction of $30,000 for a sculpture that the IRS later valued at $10,000. The applicable overvaluation penalty is:

Juanita, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Bianca, valuing the property at $150,000. The IRS later valued the gift at $300,000. The applicable undervaluation penalty is:

The IRS targets high-income individuals for an audit rate that is much higher than that of the general populace.

In preparing a tax return, a CPA should verify "to the penny" every item of information submitted by a client about its deduction for repairs and maintenance.

IRS computers use document matching programs for both individuals and business taxpayers to keep the audit rate low.

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

Evaluate this statement: a taxpayer is liable not only for tax penalties as described in the tax Code and Regulations. Sanctions elsewhere in Federal law, such as in the criminal code, also apply in a tax dispute.

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, Section 1231, and Recapture Provisions

Taxing Business Income

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 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