Question 1

Tax returns selected for most audits are selected by the Discriminant Function System.

Accepted Answer

A) True 
 B)False

Question 2

For each of the following situations,indicate the nature and amount of the penalty that could be imposed.(The penalties include both tax practitioner penalties and taxpayer penalties).
​

Accepted Answer

The answer of For each of the following situations,indicate the...

Question 3

Which of the following is the calculation of the failure-to-file penalties?

Accepted Answer

A) Half of 1 percent (0.5 percent)of the tax due for each month late,limited to 25 percent of the taxes due 
B) 5 percent of the tax due for each quarter late,limited to 25 percent of the taxes due 
C) 5 percent of the tax due for each month or part of the month that it is late,limited to 25 percent of the taxes due 
D) 20 percent of the tax due 
E) 5 percent of the tax due 
A) Half of 1 percent (0.5 percent)of the tax due for each month late,limited to 25 percent of the taxes due 
B) 5 percent of the tax due for each quarter late,limited to 25 percent of the taxes due 
C) 5 percent of the tax due for each month or part of the month that it is late,limited to 25 percent of the taxes due 
D) 20 percent of the tax due 
E) 5 percent of the tax due

Question 4

For the following independent situations,list who (the IRS,the taxpayer,the party who initiates the case,or both sides)has the burden of proof in most civil tax cases:
a.The tax case involves a penalty.
b.The tax case involves a trust with net worth of $8.3 million.
c.The taxpayer has credible evidence,maintains records,and cooperates with reasonable IRS requests.
d.The IRS uses statistics to reconstruct an individual's income.

Accepted Answer

a.The IRS

Question 5

Which of the following is not a preparer penalty?

Accepted Answer

A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return. 
A) Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. 
B) Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. 
C) Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. 
D) Tax preparers may be assessed a penalty for failing to sign a tax return.

Question 6

Janet did not file her tax return or pay her taxes for 2016 until November of 2017.She paid the following amounts to the IRS related to the late filing and payment of tax:
What amount of the above items may be deducted on Janet's 2017 individual income tax return? Explain.

Accepted Answer

$0.The interest is consumer in

Question 7

The tax law contains a penalty for filing a "frivolous" tax return.

Accepted Answer

A) True 
 B)False

Question 8

Wht are the requirements that an unerolled preparer needs to do in order to participate in the Annual Filing Season Program?

Accepted Answer

In order to participate in the Annual Fi

Question 9

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Accepted Answer

A) True 
 B)False

Question 10

Indicate in the blank space the date the statute of limitations would run out on each of the following individual tax returns.
a.​A 2017 tax return filed on April 17,2018 which omitted $20,000 of income.The total gross income shown on the tax return was $40,000
b.A 2017 tax return filed April 17,2018 which contained a large bad debt deduction
c.A 2011 tax return that was never filed
d.A 2017 tax return filed on April 17,2018
e.A fraudulent 2017 tax return filed April 17,2018
​

Accepted Answer

The answer of Indicate in the blank space the date...

Question 11

Which of the following is false regarding the return audit process?

Accepted Answer

A) The higher DIF score a return gets,the higher the likelihood for audit. 
B) An office audit is performed at an IRS office. 
C) 50 percent of taxpayers are audited every year. 
D) None of the above is false. 
A) The higher DIF score a return gets,the higher the likelihood for audit. 
B) An office audit is performed at an IRS office. 
C) 50 percent of taxpayers are audited every year. 
D) None of the above is false.

Question 12

Interest paid on an underpayment of taxes (other than an underpayment of estimated taxes)is not subject to the consumer interest limitation.

Accepted Answer

A) True 
 B)False

Question 13

What type of audit (office,field or correspondence)is demonstrated in the following examples?
a.An IRS agent views Microsoft's books and records at the Microsoft headquarters.
b.Susie receives a letter from the IRS asking her to provide documentation to support her charitable contributions on her tax return filed in the prior year.
c.Mr.and Mrs.John Doe are asked to bring their supporting documents to the downtown IRS office so that an IRS agent may review their tax return which was filed 2 years ago.

Accepted Answer

a.Field audit
b.Corr

Question 14

Tax penalties are not deductible by taxpayers.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not a possible result of an audit by the IRS?

Accepted Answer

A) Payment of a refund to the taxpayer 
B) Payment of a deficiency by the taxpayer 
C) An appeal 
D) No change in the liability 
E) All of the above are possible results 
A) Payment of a refund to the taxpayer 
B) Payment of a deficiency by the taxpayer 
C) An appeal 
D) No change in the liability 
E) All of the above are possible results

Question 16

Which of the following is the best definition of tax planning?

Accepted Answer

A) Preparing a client's tax return 
B) Planning taxpayers' financial affairs in an effort to minimize tax liability 
C) Planning taxpayers' financial affairs to find the best way to avoid tax by successfully bending tax law 
D) Researching complex tax issues 
E) None of the above are considered tax planning 
A) Preparing a client's tax return 
B) Planning taxpayers' financial affairs in an effort to minimize tax liability 
C) Planning taxpayers' financial affairs to find the best way to avoid tax by successfully bending tax law 
D) Researching complex tax issues 
E) None of the above are considered tax planning

Question 17

If a calendar year taxpayer's 2017 individual income tax return is mailed on June 15,2018,the statute of limitations would normally run out on:

Accepted Answer

A) June 15,2020 
B) June 15,2021 
C) April 15,2020 
D) April 15,2021 
E) None of the above 
A) June 15,2020 
B) June 15,2021 
C) April 15,2020 
D) April 15,2021 
E) None of the above

Question 18

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

Accepted Answer

A) True 
 B)False

Question 19

If a taxpayer makes all of his income from his job and various investments,which office of the IRS would likely investigate his return if it were audited?

Accepted Answer

A) Wage & Investment Division (W&I) 
B) Large & Midsize Business Office 
C) Small Business Office 
D) Criminal Investigation Office 
E) None of the above offices would perform the audit 
A) Wage & Investment Division (W&I) 
B) Large & Midsize Business Office 
C) Small Business Office 
D) Criminal Investigation Office 
E) None of the above offices would perform the audit

Question 20

In the following independent situations,is it better to make an installment agreement with the IRS,an offer in compromise with the IRS,or ask for an extension of time to pay any taxes owed?
a.A taxpayer is unlikely to pay the tax amount they owe.
b.Using monthly payments,a taxpayer can afford to pay off the tax owed within 2 years.
c.A taxpayer can pay off their tax owed when they sell their boat which is up for sale.

Accepted Answer

a.An offer in compromise
b.Ins

Tax returns selected for most audits are selected by the Discriminant Function System.

For each of the following situations,indicate the nature and amount of the penalty that could be imposed.(The penalties include both tax practitioner penalties and taxpayer penalties).

Which of the following is the calculation of the failure-to-file penalties?

Which of the following is not a preparer penalty?

Janet did not file her tax return or pay her taxes for 2016 until November of 2017.She paid the following amounts to the IRS related to the late filing and payment of tax: What amount of the above items may be deducted on Janet's 2017 individual income tax return? Explain.

The tax law contains a penalty for filing a "frivolous" tax return.

Wht are the requirements that an unerolled preparer needs to do in order to participate in the Annual Filing Season Program?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Which of the following is false regarding the return audit process?

Interest paid on an underpayment of taxes (other than an underpayment of estimated taxes)is not subject to the consumer interest limitation.

Tax penalties are not deductible by taxpayers.

Which of the following is not a possible result of an audit by the IRS?

Which of the following is the best definition of tax planning?

If a calendar year taxpayer's 2017 individual income tax return is mailed on June 15,2018,the statute of limitations would normally run out on:

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

If a taxpayer makes all of his income from his job and various investments,which office of the IRS would likely investigate his return if it were audited?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters

Exam 12: Tax Administration and Tax Planning

Tax returns selected for most audits are selected by the Discriminant Function System.

For each of the following situations,indicate the nature and amount of the penalty that could be imposed.(The penalties include both tax practitioner penalties and taxpayer penalties). ​

Which of the following is the calculation of the failure-to-file penalties?

Which of the following is not a preparer penalty?

Janet did not file her tax return or pay her taxes for 2016 until November of 2017.She paid the following amounts to the IRS related to the late filing and payment of tax: What amount of the above items may be deducted on Janet's 2017 individual income tax return? Explain.

The tax law contains a penalty for filing a "frivolous" tax return.

Wht are the requirements that an unerolled preparer needs to do in order to participate in the Annual Filing Season Program?

Taxpayers who are unable to pay their taxes may enter into a payment plan with the IRS if the amount they owe is within certain limits.

Which of the following is false regarding the return audit process?

Interest paid on an underpayment of taxes (other than an underpayment of estimated taxes)is not subject to the consumer interest limitation.

Tax penalties are not deductible by taxpayers.

Which of the following is not a possible result of an audit by the IRS?

Which of the following is the best definition of tax planning?

If a calendar year taxpayer's 2017 individual income tax return is mailed on June 15,2018,the statute of limitations would normally run out on:

All paid tax return preparers must sign up with the IRS and obtain a preparer tax identification number.

If a taxpayer makes all of his income from his job and various investments,which office of the IRS would likely investigate his return if it were audited?

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Business Income and Expenses Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Filters

For each of the following situations,indicate the nature and amount of the penalty that could be imposed.(The penalties include both tax practitioner penalties and taxpayer penalties).