Question 1

Temporary Regulations have more authoritative weight than revenue rulings.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following types of tax services are arranged by code section?

Accepted Answer

A)  legal tax service. 
B)  annotated tax service. 
C)  professional tax service. 
D)  topical tax service. 
E)  None of the choices are correct.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Campbell was researching a tax issue and found a favorable Tax Court opinion and an IRC Code Section that appears to answer the question. Is she finished with the research process? If so, why? If not, what must she do?

Accepted Answer

The answer of Campbell was researching a tax issue and...

Question 5

A client has recently learned of a proposed tax bill that would increase the tax rates on investment gains by 5 percent. The President does not support this increase. Please describe for your client the process by which new tax legislation is created and how the President's disapproval may influence the enactment of the bill.

Accepted Answer

The answer of A client has recently learned of a...

Question 6

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 choices are correct.

Question 7

Hong, an introductory tax student, is beginning his first research project. He has a complete understanding of the relevant facts for his project and has identified the initial research questions. He is now ready to begin using a tax service to identify relevant authorities. What are some suggestions for him on how to use tax services to identify relevant authorities?

Accepted Answer

The answer of Hong, an introductory tax student, is beginning...

Question 8

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Accepted Answer

A) True 
 B)False

Question 9

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

Accepted Answer

A)  Tax Court. 
B)  District Court. 
C)  Circuit Court. 
D)  Divorce Court. 
E)  None of the choices are correct.

Question 10

For the following tax returns, identify which of the three audit types will most likely be utilized.
a. The IRS selected Don's return for audit because of his high itemized deductions. The IRS would like documentation of these deductions.
b. Large Public Corporation is a very large publicly traded corporation. It is involved in many complex transactions that have significant tax ramifications.
c. George and Barbara operate a small business out of their home. The IRS has identified a couple of issues that may relate to their business.
d. The IRS selected Bill and Hillary's tax return for review because of some of their investment sales. They would like a better understanding of the transactions and parties involved.

Accepted Answer

The answer of For the following tax returns, identify which...

Question 11

The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

Accepted Answer

A) True 
 B)False

Question 12

Bill filed his 2018 tax return on March 15ᵗʰ, 2019. The statute of limitations for IRS assessment on Bill's 2018 tax return should end:

Accepted Answer

A)  March 15ᵗʰ, 2021. 
B)  April 15ᵗʰ, 2021. 
C)  March 15ᵗʰ, 2022. 
D)  April 15ᵗʰ, 2022. 
E)  None of the choices are correct.

Question 13

Office examinations are the most common type of IRS audit.

Accepted Answer

A) True 
 B)False

Question 14

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 choices are correct.

Question 15

Tina has a very complex tax return and it looks like she will not be able to file her tax return by its due date. When is her tax return due? What are Tina's options for paying her tax due and filing her tax return this year? What are the consequences if Tina does not file or pay her tax timely? Be specific.

Accepted Answer

The answer of Tina has a very complex tax return...

Question 16

Ramon's tax return was randomly selected for audit. Which IRS program likely selected Ramon's return for audit?

Accepted Answer

A)  DIF System. 
B)  National Research Program. 
C)  Document perfection. 
D)  Information matching. 
E)  None of the choices are correct.

Question 17

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 choices are correct.

Question 18

Which of the following is not a common tool used in conducting tax research?

Accepted Answer

A)  Citator. 
B)  Annotated tax service. 
C)  Topical tax service. 
D)  Keyword search. 
E)  None of the choices are correct.

Question 19

For fraudulent tax returns, the statute of limitations for IRS assessment is ten years.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following has the highest authoritative weight?

Accepted Answer

A)  Legislative regulation. 
B)  Private letter ruling. 
C)  Revenue ruling. 
D)  Action on decision. 
E)  Revenue procedure.

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

Temporary Regulations have more authoritative weight than revenue rulings.

Which of the following types of tax services are arranged by code section?

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

Campbell was researching a tax issue and found a favorable Tax Court opinion and an IRC Code Section that appears to answer the question. Is she finished with the research process? If so, why? If not, what must she do?

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

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

Bill filed his 2018 tax return on March 15ᵗʰ, 2019. The statute of limitations for IRS assessment on Bill's 2018 tax return should end:

Office examinations are the most common type of IRS audit.

Which of the following is not considered a primary authority?

Ramon's tax return was randomly selected for audit. Which IRS program likely selected Ramon's return for audit?

A taxpayer can avoid a substantial understatement of tax penalty:

Which of the following is not a common tool used in conducting tax research?

For fraudulent tax returns, the statute of limitations for IRS assessment is ten years.

Which of the following has the highest authoritative weight?