Question 1

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.F) All of the above
G) D) and E)

Question 2

Of the two basic types of tax services,beginning tax researchers often prefer topical tax services.

Accepted Answer

A) True 
 B)False

Question 3

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:

Accepted Answer

A)  September 15ᵗʰ.
B)  October 15ᵗʰ.
C)  August 15ᵗʰ.
D)  November 15ᵗʰ.
E)  None of the choices are correct.F) A) and B)
G) B) and D)

Question 4

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 5

In researching a question of fact,the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Allen filed his 2018 tax return on May 15ᵗʰ,2019 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 2018 tax return should end:

Accepted Answer

A)  May 15ᵗʰ,2021.
B)  April 15ᵗʰ,2021.
C)  May 15ᵗʰ,2022.
D)  April 15ᵗʰ,2022.
E)  None of the choices are correct.F) A) and B)
G) A) and C)

Question 8

Which of the following is not a source of a tax practitioner's professional responsibilities?

Accepted Answer

A)  AICPA Code of Professional Conduct.
B)  Statements on Standards for Tax Services.
C)  Circular 230.
D)  State Board of Accountancy statutes.
E)  None of the choices are correct.F) All of the above
G) A) and D)

Question 9

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income.What are the potential ramifications to her client of this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

Accepted Answer

There are serious ramifications of commi...

Question 10

Which of the following is not a common method that the IRS uses to select returns for audit?

Accepted Answer

A)  DIF system.
B)  Tax Select system.
C)  Information matching.
D)  Document perfection.
E)  None of the choices are correct.F) A) and D)
G) None of the above

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  April 14ᵗʰ.
B)  April 15ᵗʰ.
C)  April 16ᵗʰ.
D)  April 17ᵗʰ.
E)  None of the choices are correct.F) B) and C)
G) A) and B)

Question 13

In a planning context,

Accepted Answer

A)  closed facts are preferred to open facts.
B)  new facts are preferred to old facts.
C)  old facts are preferred to new facts.
D)  open facts are preferred to closed facts.
E)  None of the choices are correct.F) A) and B)
G) B) and D)

Question 14

The three basic types of IRS examinations are computer exams,office exams,and business exams.

Accepted Answer

A) True 
 B)False

Question 15

If the IRS assesses additional tax on a tax return upon audit,a taxpayer may be subject to interest and penalties on the underpayment.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Revenue rulings and revenue procedures are examples of primary authorities.

Accepted Answer

A) True 
 B)False

Question 18

Greg earned $25,500 this year and had $1,500 of federal income taxes withheld from his salary.Assuming that Greg is single,25 years old,and will have a total tax liability of $1,430 (and thus will receive a $70) refund,he:

Accepted Answer

A)  is required to file a tax return.
B)  is not required to file a tax return but should file a return anyway.
C)  is required to file a tax return but should not file because he owes no tax.
D)  is not required to file a tax return and should not file a return.
E)  None of the choices are correct.F) All of the above
G) C) and E)

Question 19

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.F) A) and B)
G) A) and C)

Question 20

For which of the following tax violations is a civil penalty not imposed on taxpayers?

Accepted Answer

A)  Failure to file a tax return.
B)  Failure to pay tax owed.
C)  Fraud.
D)  Failure to make estimated tax payments.
E)  None of the choices are correct.F) A) and B)
G) C) and E)

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

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.

Correct AnswerverifiedShow Answer

Which of the following is not a common method that the IRS uses to select returns for audit?

Correct AnswerverifiedShow Answer

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income.What are the potential ramifications to her client of this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

Correct AnswerverifiedThere are serious ramifications of commi...View AnswerShow Answer

Which of the following has the highest authoritative weight?

Correct AnswerverifiedShow Answer

Of the two basic types of tax services,beginning tax researchers often prefer topical tax services.

Correct AnswerverifiedShow Answer

Which of the following is not a source of a tax practitioner's professional responsibilities?

Correct AnswerverifiedShow Answer

Greg earned $25,500 this year and had $1,500 of federal income taxes withheld from his salary.Assuming that Greg is single,25 years old,and will have a total tax liability of $1,430 (and thus will receive a $70) refund,he:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Revenue rulings and revenue procedures are examples of primary authorities.

Correct AnswerverifiedShow Answer

A taxpayer can avoid a substantial understatement of tax penalty:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

In researching a question of fact,the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

Correct AnswerverifiedShow Answer

In a planning context,

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

If the IRS assesses additional tax on a tax return upon audit,a taxpayer may be subject to interest and penalties on the underpayment.

Correct AnswerverifiedShow Answer

The three basic types of IRS examinations are computer exams,office exams,and business exams.

Correct AnswerverifiedShow Answer

For which of the following tax violations is a civil penalty not imposed on taxpayers?

Correct AnswerverifiedShow Answer

Allen filed his 2018 tax return on May 15ᵗʰ,2019 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 2018 tax return should end:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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There are serious ramifications of commi...
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