Exam 12: Tax Administration and Tax Planning

A taxpayer made estimated tax payments in excess of the tax due for the year,but failed to file a tax return.Since the taxes were paid in full,would there be a penalty?

Kendall is considering the purchase of a home.He has saved $22,000 for a down payment on a home and will finance the remainder of the purchase price with a home mortgage loan.Kendall currently rents an apartment for $1,200 per month and does not anticipate an increase in his monthly income.He wants to make sure that the monthly payment on his new home does not exceed $1,200,after-tax.Kendall has a marginal tax rate of 25 percent and an average tax rate of 22 percent.Assuming the monthly mortgage payment (before-tax)will be equal to 1 percent of the initial mortgage balance and the entire amount of each monthly payment will be deductible home mortgage interest,what is the maximum amount that Kendall can spend on a new home?

Indicate the date that the statute of limitations would run out on the following situations: ​ a.The IRS assesses additional taxes for a 2015 tax return audit on May 5,2017.How long does the IRS have to collect the tax? b.On April 1,2017,the IRS asks for and the taxpayer agrees to an additional year from April 1,2017 to complete an audit for a 2013 tax return which was filed on March 9,2014. c.Jeremy reported $10,000 of worthless debt on his 2016 tax return which he filed on August 3,2017. d.Jenny files her 2017 tax return on February 25,2018. e.James omits 7 percent of his income on his 2015 tax return which he filed on July 12,2016.

Stephanie has taxable income of $48,200 and a tax liability of $7,795.If Stephanie's income increases by $4,000,her tax liability will be $8,795. ​ a.What is her average tax rate on the $48,200 of income? b.What is her marginal tax rate?

Taxpayers are required by law to maintain records to facilitate an IRS audit.

The Discriminant Function System is designed to identify tax returns that may contain errors.

​Which of the following is not a characteristic around which tax planning is organized:

Which of the following statements best describes the process of tax planning?

Mike deducts a bad debt on his 2017 tax return.How many years is the statute of limitations for the bad debt deduction?

What is the difference between tax avoidance and tax evasion?

The Taxpayer Bill of Rights is summarized in IRS Publication 1.

At which of the following IRS locations are tax returns processed?

The statute of limitations for the deduction of a worthless security is 5 years.

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Craig commits fraud on his tax return.It is found that he was $40,000 deficient in his tax because of the fraud.What would his penalty be?

As a result of an IRS audit,a taxpayer may be required to pay additional taxes,but he or she is never paid a refund.

A tax return with a large casualty loss would be most likely selected for audit through:

A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.

Tax practitioners can be assessed a penalty for promoting an abusive tax shelter.

The IRS determined that John underpaid his 2015 tax liability by $6,000 due to negligence.In 2017,John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS. a.Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation. b.What part of the deficiency,income taxes,interest and penalty,is deductible by John on his current tax return? Explain.