Question 1

Which of the following is not considered a primary authority?

Accepted Answer

A) Tax Court case. 
B) Treasury Regulation. 
C) Revenue Ruling. 
D) Tax service. 
E) None of the above. 
A) Tax Court case. 
B) Treasury Regulation. 
C) Revenue Ruling. 
D) Tax service. 
E) None of the above. D

Question 2

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Accepted Answer

A) True 
 B)False  True

Question 3

For the 2016 tax returns, indicate when the statute of limitation expires and why.
a. Simon filed his tax return on April 10, 2017.
b. Billy and Barbara filed their tax returns late on December 1, 2017.
c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2017 but did not report his illegal income on his tax return.
d. Luther filed his tax return on July 17, 2017 but has accidentally underreported his taxable gross income by 20%.

Accepted Answer

(a) April 15, 2020. The statute of limitations expires three years from the later of the original due date of the return or the date the return was filed. (b) December 1, 2020. The statute of limitations expires three years from the later of the original due date of the return or the date the return was filed. (c) Because Pearson filed a fraudulent tax return, the statute of limitation will not lapse for his 2016 tax return. (d) July 17, 2020. Because Luther accidentally underreported his income by only 20%, the statute of limitations will expire three years from the date the return is filed (i.e., the statute of limitation is not extended to six years).

Question 4

Proposed and Temporary Regulations have the same authoritative weight.

Accepted Answer

A) True 
 B)False

Question 5

The three basic types of IRS examinations are computer exams, office exams, and business exams.

Accepted Answer

A) True 
 B)False

Question 6

Allen filed his 2016 tax return on May 15th, 2017 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2016 tax return should end:

Accepted Answer

A) May 15th, 2019. 
B) April 15th, 2019. 
C) May 15th, 2020. 
D) April 15th, 2020. 
E) None of the abovE.Because Allen underreported his gross income by 30 percent, the SOL ends six years from the later of (1) the date the tax return was filed or (2) the tax return's original due date. 
A) May 15th, 2019. 
B) April 15th, 2019. 
C) May 15th, 2020. 
D) April 15th, 2020. 
E) None of the abovE.Because Allen underreported his gross income by 30 percent, the SOL ends six years from the later of (1) the date the tax return was filed or (2) the tax return's original due date.

Question 7

The IRS DIF system checks each tax return for mathematical mistakes and errors.

Accepted Answer

A) True 
 B)False

Question 8

A tax practitioner can avoid IRS penalty relating to a tax return position:

Accepted Answer

A) if the position is frivolous and disclosed on the tax return. 
B) if the position has a realistic possibility of being sustained by the IRS or courts. 
C) if there is substantial authority to support the position. 
D) if the position has a reasonable basis and is not disclosed on the tax return. 
E) None of the above. 
A) if the position is frivolous and disclosed on the tax return. 
B) if the position has a realistic possibility of being sustained by the IRS or courts. 
C) if there is substantial authority to support the position. 
D) if the position has a reasonable basis and is not disclosed on the tax return. 
E) None of the above.

Question 9

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

Accepted Answer

A) 30-day letter. 
B) 90-day letter. 
C) Appeals letter. 
D) Tax adjustment letter. 
E) None of the above. 
A) 30-day letter. 
B) 90-day letter. 
C) Appeals letter. 
D) Tax adjustment letter. 
E) None of the above.

Question 10

Mary Ann is working on a pretty big research project. Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact, whereas others are likely to be questions of law. Explain the difference between the two types of questions and how this would influence her research.

Accepted Answer

Two basic types of issues that researche

Question 11

Temporary Regulations have more authoritative weight than revenue rulings.

Accepted Answer

A) True 
 B)False

Question 12

Office examinations are the most common type of IRS audit.

Accepted Answer

A) True 
 B)False

Question 13

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Accepted Answer

A) True 
 B)False

Question 14

If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

Accepted Answer

A) April 15th. 
B) October 15th. 
C) August 15th. 
D) November 15th. 
E) None of the above. 
A) April 15th. 
B) October 15th. 
C) August 15th. 
D) November 15th. 
E) None of the above.

Question 15

Henry filed his 2016 tax return on May 15th, 2017. The statute of limitations for IRS assessment on Henry's 2016 tax return should end:

Accepted Answer

A) May 15th, 2019. 
B) April 15th, 2019. 
C) May 15th, 2020. 
D) April 15th, 2020. 
E) None of the abovE.The SOL ends three years from the later of (1) the date the tax return was filed or (2) the tax return's original due date. 
A) May 15th, 2019. 
B) April 15th, 2019. 
C) May 15th, 2020. 
D) April 15th, 2020. 
E) None of the abovE.The SOL ends three years from the later of (1) the date the tax return was filed or (2) the tax return's original due date.

Question 16

Circular 230 was issued by:

Accepted Answer

A) AICPA. 
B) State Boards of Accountancy. 
C) American Bar Association. 
D) IRS. 
E) None of the above. 
A) AICPA. 
B) State Boards of Accountancy. 
C) American Bar Association. 
D) IRS. 
E) None of the above.

Question 17

For the following taxpayers indicate whether the taxpayer should file a tax return and why.
a. Robert earned $50,000 this year as a staff accountant. His estimated tax liability is $4,500, and he expects to receive a $500 tax refund.
b. Amy earned $4,000 this year working part-time. She will have no federal tax liability and has not made any federal tax payments.
c. Ty earned $2,500 this summer and had $200 of federal taxes withheld from his paycheck. He will have no federal tax liability this year.
d. Startup Corporation had a $50,000 loss this year.
e. The Walker Family Trust earned $500 of gross income this year.

Accepted Answer

(a) Because his gross income exceeds the

Question 18

A taxpayer can avoid a substantial understatement of tax penalty:

Accepted Answer

A) if the position is frivolous and disclosed on the tax return. 
B) if the position has a realistic possibility of being sustained by the IRS or courts. 
C) if the position is not frivolous and disclosed on the tax return. 
D) if the position has a reasonable basis and is disclosed on the tax return. 
E) None of the above. 
A) if the position is frivolous and disclosed on the tax return. 
B) if the position has a realistic possibility of being sustained by the IRS or courts. 
C) if the position is not frivolous and disclosed on the tax return. 
D) if the position has a reasonable basis and is disclosed on the tax return. 
E) None of the above.

Question 19

For the 2016 tax returns, indicate when the statute of limitation expires and why.
a. Phoenix filed his tax return on February 28, 2017.
b. Jill and Randy filed their tax return on August 16, 2017.
c. Although required to file, Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return.
d. Jerry filed his tax return on May 22, 2017 but has accidentally underreported his taxable income by 30%.

Accepted Answer

(a) April 15, 2020. The statute of limit

Question 20

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

Accepted Answer

A) True 
 B)False

Exam 2: Tax Compliance, the Irs, and Tax Authorities

Which of the following is not considered a primary authority?

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Proposed and Temporary Regulations have the same authoritative weight.

The three basic types of IRS examinations are computer exams, office exams, and business exams.

Allen filed his 2016 tax return on May 15th, 2017 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2016 tax return should end:

The IRS DIF system checks each tax return for mathematical mistakes and errors.

A tax practitioner can avoid IRS penalty relating to a tax return position:

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

Temporary Regulations have more authoritative weight than revenue rulings.

Office examinations are the most common type of IRS audit.

The Internal Revenue Code and tax treaties are examples of statutory authorities.

If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

Henry filed his 2016 tax return on May 15th, 2017. The statute of limitations for IRS assessment on Henry's 2016 tax return should end:

Circular 230 was issued by:

A taxpayer can avoid a substantial understatement of tax penalty:

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

An Introduction to Tax

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Allen filed his 2016 tax return on May 15^th, 2017 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2016 tax return should end:

Henry filed his 2016 tax return on May 15^th, 2017. The statute of limitations for IRS assessment on Henry's 2016 tax return should end: