Question 1

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

Accepted Answer

A) True 
 B)False

Question 2

In general, a CPA will satisfy his professional responsibilities under the Statement on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

Accepted Answer

A) True 
 B)False

Question 3

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 4

The IRS has recently completed its audit of Lorene's corporation. As a tax novice, she has very little understanding regarding the audit process and what happens next. Describe the post-audit process for Lorene and identify her options.

Accepted Answer

The answer of The IRS has recently completed its audit...

Question 5

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 these.

Question 6

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 income this year.

Accepted Answer

The answer of For the following taxpayers indicate whether the...

Question 7

Office examinations are the most common type of IRS audit.

Accepted Answer

A) True 
 B)False

Question 8

Because the U.S. District Court hears a broader set of cases, decisions by the U.S. District Court may be considered to have more authoritative weight than the U.S. Court of Federal Claims.

Accepted Answer

A) True 
 B)False

Question 9

Which types of penalties are only imposed after normal due process including a trial?

Accepted Answer

A)  criminal penalties. 
B)  civil penalties. 
C)  criminal and civil penalties. 
D)  tax return. 
E)  None of these.

Question 10

Circular 230 was issued by:

Accepted Answer

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

Question 11

Which of the following courts is the only court that provides for a jury trial?

Accepted Answer

A)  Tax Court. 
B)  U.S. Court of Federal Claims. 
C)  U.S. District Court. 
D)  U.S. Circuit Court of Appeals. 
E)  None of these.

Question 12

Which of the following is not considered a primary authority?

Accepted Answer

A)  Tax Court case 
B)  Regulation 
C)  Revenue ruling 
D)  Tax service 
E)  None of these.

Question 13

Which of the following has the highest authoritative weight?

Accepted Answer

A)  Text book. 
B)  Private letter ruling. 
C)  Revenue ruling. 
D)  Tax service. 
E)  Tax article.

Question 14

Lavonda discovered that the U.S. Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case:

Accepted Answer

A)  Tax Court only. 
B)  U.S. Court of Federal Claims only. 
C)  U.S. District Court only. 
D)  Tax Court or the U.S. District Court. 
E)  Tax Court or the U.S. Court of Federal Claims.

Question 15

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Accepted Answer

A) True 
 B)False

Question 16

Andy filed a fraudulent 2014 tax return on May 1, 2015. The statute of limitations for IRS assessment on Andy's 2014 tax return should end:

Accepted Answer

A)  May 1st, 2017. 
B)  April 15th, 2017. 
C)  May 1st, 2018. 
D)  April 15th, 2018. 
E)  None of these.

Question 17

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Accepted Answer

A)  IRS regulations 
B)  U.S. Tax Court cases 
C)  Committee reports 
D)  IRS revenue rulings 
E)  None of these.

Question 18

Chris and Chuck were recently debating whether the Internal Revenue Code is "logical." Chris offers that she has briefly reviewed the Code and could hardly understand its organizational structure, if there is one. Please describe the basic organization of the code and how understanding its organization may be especially beneficial to the tax researcher.

Accepted Answer

The answer of Chris and Chuck were recently debating whether...

Question 19

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

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

Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

In general, a CPA will satisfy his professional responsibilities under the Statement on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

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?

The IRS has recently completed its audit of Lorene's corporation. As a tax novice, she has very little understanding regarding the audit process and what happens next. Describe the post-audit process for Lorene and identify her options.

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:

Office examinations are the most common type of IRS audit.

Because the U.S. District Court hears a broader set of cases, decisions by the U.S. District Court may be considered to have more authoritative weight than the U.S. Court of Federal Claims.

Which types of penalties are only imposed after normal due process including a trial?

Circular 230 was issued by:

Which of the following courts is the only court that provides for a jury trial?

Which of the following is not considered a primary authority?

Which of the following has the highest authoritative weight?

Lavonda discovered that the U.S. Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case:

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Andy filed a fraudulent 2014 tax return on May 1, 2015. The statute of limitations for IRS assessment on Andy's 2014 tax return should end:

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

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

Which of the following has the highest authoritative weight?