Question 1

When must a tax return preparer refrain from claiming estimated deductions on a client's tax return?

Accepted Answer

A tax return preparer must refrain from

Question 2

A paid tax return preparer estimated a client's charitable contributions based on the taxpayer's statement that she "donates $20 cash every week to her church" and she "attends church weekly, without fail." Upon audit, the IRS discovered that this taxpayer never attends church and never made any charitable contributions. This tax return preparer is:

Accepted Answer

A)  Not subject to any fines or penalties 
B)  Subject to civil fines, but not criminal penalties, if the character of these claimed deductions as estimates was adequately disclosed to the IRS with the word "estimate" or the abbreviation "est." appearing adjacent to the estimated item 
C)  Subject to civil fines and potentially subject to criminal penalties 
D)  Subject to having his license as a professional tax return preparer suspended for a short period of time 
A)  Not subject to any fines or penalties 
B)  Subject to civil fines, but not criminal penalties, if the character of these claimed deductions as estimates was adequately disclosed to the IRS with the word "estimate" or the abbreviation "est." appearing adjacent to the estimated item 
C)  Subject to civil fines and potentially subject to criminal penalties 
D)  Subject to having his license as a professional tax return preparer suspended for a short period of time

Question 3

A taxpayer is a licensed contractor who repairs defective electrical wiring in building elevators. She wishes to assert a tax position concerning the deductibility of depreciation expense on a home garage where she stores tools used in conducting her profession. Her tax position satisfies the "reasonable basis" standard. This taxpayer ordinarily may:

Accepted Answer

A)  Assert this tax position only if advance written permission is obtained from the IRS 
B)  Assert this tax position only if the position is prominently disclosed to the IRS 
C)  Not assert this tax position 
D)  Without special conditions or disclosures 
A)  Assert this tax position only if advance written permission is obtained from the IRS 
B)  Assert this tax position only if the position is prominently disclosed to the IRS 
C)  Not assert this tax position 
D)  Without special conditions or disclosures

Question 4

If tax return preparers were permitted to solely act as advocates for their clients' interests, without regard to the public interest, what would be the consequences?

Accepted Answer

If tax return preparers were permitted t

Question 5

Based on the advice of a tax return preparer, a taxpayer recently reported the market value of an unusual property distribution received from a real estate investment trust in her gross income. After the tax return was filed, the U.S. Tax Court ruled that similar kinds of distributions are not includible in gross income. The tax return preparer has:

Accepted Answer

A)  A duty to have retained the taxpayer's contact information and a duty to inform the client of this legal ruling 
B)  A duty to inform the client of this legal ruling only if the amounts at issue are material to the taxpayer, measured as a percentage of the taxpayer's reported gross income 
C)  A duty to inform the client of this legal ruling only if the amounts at issue are material to the taxpayer, measured as a percentage of the taxpayer's net worth 
D)  No duty to contact the taxpayer 
A)  A duty to have retained the taxpayer's contact information and a duty to inform the client of this legal ruling 
B)  A duty to inform the client of this legal ruling only if the amounts at issue are material to the taxpayer, measured as a percentage of the taxpayer's reported gross income 
C)  A duty to inform the client of this legal ruling only if the amounts at issue are material to the taxpayer, measured as a percentage of the taxpayer's net worth 
D)  No duty to contact the taxpayer

Question 6

In what circumstances may a tax return preparer rely upon information furnished by a client?

Accepted Answer

A tax return preparer may generally rely

Question 7

A tax return preparer generally has a professional duty to:

Accepted Answer

A)  Review, but not verify, all documents supporting a client's reported deductions 
B)  Review and verify all documents supporting a client's reported deductions if the deduction amounts are material 
C)  Review and verify all documents supporting a client's reported deductions, regardless of whether the deduction amounts are material or immaterial 
D)  Neither review nor verify the documents supporting a client's reported deductions 
A)  Review, but not verify, all documents supporting a client's reported deductions 
B)  Review and verify all documents supporting a client's reported deductions if the deduction amounts are material 
C)  Review and verify all documents supporting a client's reported deductions, regardless of whether the deduction amounts are material or immaterial 
D)  Neither review nor verify the documents supporting a client's reported deductions

Question 8

A taxpayer ordinarily should not assert a tax position unless it is supported by a reasonable possibility of success." This standard commonly is referred to as requiring a certain probability of acceptance or approval if the position is detected and challenged by the taxing authority. What is the associated probability of success?

Accepted Answer

A)  20% 
B)  33.3% 
C)  40% 
D)  Over 50% 
A)  20% 
B)  33.3% 
C)  40% 
D)  Over 50%

Question 9

A taxpayer ordinarily should not assert a tax position unless it is supported by "substantial authority." This standard commonly is referred to as requiring a certain probability of acceptance or approval if the position is detected and challenged by the taxing authority. What is the associated probability of success?

Accepted Answer

A)  20% 
B)  33.3% 
C)  40% 
D)  Over 50% 
A)  20% 
B)  33.3% 
C)  40% 
D)  Over 50%

Question 10

The "Cohan Rule" states that:

Accepted Answer

A)  A taxpayer is not liable for tax liability that arose due to a tax return preparer's negligence 
B)  A taxpayer who incurred legitimate tax deductions may claim reasonable estimates of these deductions on her tax return 
C)  A taxpayer who furnishes incomplete information to a tax return preparer may claim estimated deductions only if the tax return preparer independently determines the amounts of these estimates in good faith 
D)  A tax return preparer who claims estimated deductions on a client's tax return is legally liable to the government for any tax liability that arises if the deductions are illegitimate and the taxpayer is unable or unwilling to pay the resulting increase in tax liability 
A)  A taxpayer is not liable for tax liability that arose due to a tax return preparer's negligence 
B)  A taxpayer who incurred legitimate tax deductions may claim reasonable estimates of these deductions on her tax return 
C)  A taxpayer who furnishes incomplete information to a tax return preparer may claim estimated deductions only if the tax return preparer independently determines the amounts of these estimates in good faith 
D)  A tax return preparer who claims estimated deductions on a client's tax return is legally liable to the government for any tax liability that arises if the deductions are illegitimate and the taxpayer is unable or unwilling to pay the resulting increase in tax liability

Question 11

The Statements of Standards on Tax Services (SSTS) governs:

Accepted Answer

A)  CPAs engaged in federal tax practice only 
B)  CPAs engaged in federal, state, or local tax practice 
C)  Attorneys, actuaries, enrolled agents, and CPAs engaged in federal tax practice 
D)  All registered tax return preparers, whether or not they are CPAs 
A)  CPAs engaged in federal tax practice only 
B)  CPAs engaged in federal, state, or local tax practice 
C)  Attorneys, actuaries, enrolled agents, and CPAs engaged in federal tax practice 
D)  All registered tax return preparers, whether or not they are CPAs

Question 12

What are some of the practical problems associated with applying the tax reporting standards, such as the "reasonable basis" standard?

Accepted Answer

Some of the practical problems associate

Question 13

For CPAs solely engaged in professional tax practice, abiding by the Statements of Standards on Tax Services (SSTS) is:

Accepted Answer

A)  Mandatory because it is the only set of professional conduct rules that applies to them 
B)  Desirable, but not mandatory 
C)  Mandatory, when acting as a tax return preparer, but not as a tax planner 
D)  Mandatory, even if they do not represent taxpayers in IRS audits or administrative proceedings 
A)  Mandatory because it is the only set of professional conduct rules that applies to them 
B)  Desirable, but not mandatory 
C)  Mandatory, when acting as a tax return preparer, but not as a tax planner 
D)  Mandatory, even if they do not represent taxpayers in IRS audits or administrative proceedings

Question 14

A client wants to claim a dubious tax deduction, but the client's deduction does is not "more likely than not" to be approved of, if detected and challenged by the IRS. What options are available to this client?

Accepted Answer

The client has a few options available t

Question 15

A taxpayer is willing to make a clear disclosure to the IRS on the face of his tax return that he is claiming a questionable tax return deduction. Ordinarily, the taxpayer may:

Accepted Answer

A)  Claim the tax position if, at minimum, it meets the "not frivolous" test 
B)  Claim the tax position if, at minimum, it meets the "reasonable basis" test 
C)  Claim the tax position as long as the taxpayer's can adequately document the date, time, and purpose for the deduction 
D)  Not claim the deduction 
A)  Claim the tax position if, at minimum, it meets the "not frivolous" test 
B)  Claim the tax position if, at minimum, it meets the "reasonable basis" test 
C)  Claim the tax position as long as the taxpayer's can adequately document the date, time, and purpose for the deduction 
D)  Not claim the deduction

Question 16

A tax return preparer may prepare a tax return solely based on information furnished by a client:

Accepted Answer

A)  If the information appears to be reliable on its face 
B)  Even if the information appears to be inconsistent with reality 
C)  Even if the preparer knows facts that would make a person question the authenticity of the furnished information 
D)  As long as the taxpayer agrees in writing to accept full responsibility for the authenticity of the furnished information 
A)  If the information appears to be reliable on its face 
B)  Even if the information appears to be inconsistent with reality 
C)  Even if the preparer knows facts that would make a person question the authenticity of the furnished information 
D)  As long as the taxpayer agrees in writing to accept full responsibility for the authenticity of the furnished information

Question 17

When does "substantial authority" exist for a tax return position?

Accepted Answer

"Substantial authority" for a tax return

When must a tax return preparer refrain from claiming estimated deductions on a client's tax return?

If tax return preparers were permitted to solely act as advocates for their clients' interests, without regard to the public interest, what would be the consequences?

In what circumstances may a tax return preparer rely upon information furnished by a client?

A tax return preparer generally has a professional duty to:

The "Cohan Rule" states that:

The Statements of Standards on Tax Services (SSTS) governs:

What are some of the practical problems associated with applying the tax reporting standards, such as the "reasonable basis" standard?

For CPAs solely engaged in professional tax practice, abiding by the Statements of Standards on Tax Services (SSTS) is:

A client wants to claim a dubious tax deduction, but the client's deduction does is not "more likely than not" to be approved of, if detected and challenged by the IRS. What options are available to this client?

A taxpayer is willing to make a clear disclosure to the IRS on the face of his tax return that he is claiming a questionable tax return deduction. Ordinarily, the taxpayer may:

A tax return preparer may prepare a tax return solely based on information furnished by a client:

When does "substantial authority" exist for a tax return position?

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue, Justice, and Social Responsibility

Why We Cheat

Greed, Corruption, and Collusion

Fraud and Earnings Management

Discreditable Acts: Discrimination, Deceit, and Disclosure

Confidentiality

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Fiduciaries: Financial Planners, Trustees, and Executors

Duties in the Accounting Workplace Online Only

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Exam 14: Duties of Tax Professionals

When must a tax return preparer refrain from claiming estimated deductions on a client's tax return?

If tax return preparers were permitted to solely act as advocates for their clients' interests, without regard to the public interest, what would be the consequences?

In what circumstances may a tax return preparer rely upon information furnished by a client?

A tax return preparer generally has a professional duty to:

The "Cohan Rule" states that:

The Statements of Standards on Tax Services (SSTS) governs:

What are some of the practical problems associated with applying the tax reporting standards, such as the "reasonable basis" standard?

For CPAs solely engaged in professional tax practice, abiding by the Statements of Standards on Tax Services (SSTS) is:

A client wants to claim a dubious tax deduction, but the client's deduction does is not "more likely than not" to be approved of, if detected and challenged by the IRS. What options are available to this client?

A taxpayer is willing to make a clear disclosure to the IRS on the face of his tax return that he is claiming a questionable tax return deduction. Ordinarily, the taxpayer may:

A tax return preparer may prepare a tax return solely based on information furnished by a client:

When does "substantial authority" exist for a tax return position?

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue, Justice, and Social Responsibility

Why We Cheat

Greed, Corruption, and Collusion

Fraud and Earnings Management

Discreditable Acts: Discrimination, Deceit, and Disclosure

Confidentiality

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Fiduciaries: Financial Planners, Trustees, and Executors

Duties in the Accounting Workplace Online Only

Filters