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

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Question 21

True/False

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

A) True
B) False

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verified

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Question 22

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Office examinations are the most common type of IRS audit.

A) True
B) False

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Question 23

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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?

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:

Which of the following has the highest authoritative weight?

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 timely? Be specific.

Temporary Regulations have more authoritative weight than revenue rulings.

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:

Which of the following is not considered a primary authority?

A taxpayer can avoid a substantial understatement of tax penalty:

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

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

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

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?

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.

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

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.

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.