Exam 26: Tax Practice and Ethics

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 -Negligence.

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

Jake, an individual calendar year taxpayer, incurred the following transactions. Assuming that any error in timely reporting these amounts was inadvertent, how much omission from gross income would be required before the six-year statute of limitations would apply?

Fiona, a VITA volunteer for her college's tax clinic, is not a tax preparer as defined by the Code. Thus, Fiona is exempted from the Code's tax preparer penalties.

An individual might be incarcerated upon a conviction for:

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 -Preparer penalty for reckless conduct.

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.

The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return. Describe how these penalties work.

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

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

Concerning the penalty for civil tax fraud:

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 -Aiding in preparing an improper tax return.

What are the chief responsibilities of the IRS Commissioner, and of the Chief Counsel of the IRS?

If an ex-employee wants to give information to the IRS about shady tax dealings about the employer, where the disputed amount is $500,000, the best approach is to use the:

The IRS is organized according to the industry classification of the taxpayer. One of the operating divisions of the IRS deals exclusively with manufacturing and exporting businesses.

In a letter ruling, the IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction.

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

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.

Compute the failure to pay and failure to file penalties for John, who filed his 2018 income tax return on December 14, 2019, paying the $10,000 amount due. On April 1, 2019, John submitted a six-month extension of time in which to file his return? he paid no tax with the extension request. He has no reasonable cause for failing to file his return by October 15, or for failing to pay the tax that was due on April 15, 2019. John's failure to comply with the tax laws was not fraudulent.

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 -Undervaluation of a reported item.