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Exam 2: Tax Compliance, The IRS and Tax Authorities

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Question 1

True/False

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The Internal Revenue Code and tax treaties are examples of statutory authorities.

A) True
B) False

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True

Question 2

Multiple Choice

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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?

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

F) C) and D)
G) C) and E)

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Question 3

Multiple Choice

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Circular 230 was issued by:

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 gross income this year.

Which of the following is not considered a primary authority?

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

For the 2017 tax returns,indicate when the statute of limitation expires and why. a.Phoenix filed his tax return on February 28,2018. b.Jill and Randy filed their tax return on August 16,2018. c.Although required to file,Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return. d.Jerry filed his tax return on May 22,2018 but has accidentally underreported his taxable income by 30%.

Office examinations are the most common type of IRS audit.

Under the Statement on Standards for Tax Services,a CPA may recommend a tax return position if the position is frivolous and the position is not disclosed on the tax return.

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

Allen filed his 2017 tax return on May 15ᵗʰ,2018 and underreported his gross income by 30 percent.Assuming Allen's underreporting is not due to fraud,the statute of limitations for IRS assessment on Allen's 2017 tax return should end:

For the 2017 tax returns,indicate when the statute of limitation expires and why. a.Simon filed his tax return on April 10,2018. b.Billy and Barbara filed their tax returns late on December 1,2018. c.Pearson earns a living through various illegal activities.He filed his tax return on March 14,2018 but did not report his illegal income on his tax return. d.Luther filed his tax return on July 17,2018 but has accidentally underreported his taxable gross income by 20%.

Roddy was researching an issue and found a favorable Tax Court decision that addresses his issue.He also determined that there was a nonacquiescence for the case.Who issued the nonacquiescence? What is it? What does it mean and how would it affect Roddy's reliance on the court case?

Corporations are required to file a tax return annually regardless of their taxable income.

Josephine is considering taking a 6-month rotation in Paris for her job.Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Temporary Regulations have more authoritative weight than revenue rulings.

If the President vetoes tax legislation,Congress:

Kodak is a beginning tax researcher.He knows that the 1ˢᵗ 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.

Kim has decided to litigate a tax issue with the IRS.Describe the trial level courts that Kim may use to litigate the case.

If Paula requests an extension to file her individual tax return,the latest she could file her return without a failure-to-file penalty is: