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

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Question 31

True/False

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The "90-day" letter gives the taxpayer the opportunity to pay a proposed IRS tax adjustment or file a petition in the U.S.District Court to contest the adjustment and hear the case.

A) True
B) False

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Question 32

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Proposed and temporary regulations have the same authoritative weight.

A) True
B) False

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Question 33

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A taxpayer can avoid a substantial understatement of tax penalty:

Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

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

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:

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.

If a taxpayer is due a refund, she does not have to file a tax return.

Henry filed his 2019 tax return on May 15^th, 2020.The statute of limitations for IRS assessment on Henry's 2018 tax return should end:

Lavonda discovered that the 5^th Circuit (where Lavonda resides) 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:

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

Mary Ann is working on a pretty big research project.Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact, whereas others are likely to be questions of law.Explain the difference between the two types of questions and how this would influence her research.

Kodak is a beginning tax researcher.He knows that the first step of the research process is to get an understanding of the facts surrounding the transaction being researched.Describe the two basic types of facts, the sources of facts for a research project, and any advice that may help Kodak.

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

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 in a timely manner? Be specific.

If an individual taxpayer is unable to file a tax return by its original due date, the taxpayer can request an automatic nine-month extension to file the return.

Which of the following audits is the most common and typically less comprehensive?

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

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.

Generally, if April 15^th falls on a Saturday, individual tax returns will be due on: