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

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Question 41

Multiple Choice

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In a planning context,

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 these.

F) B) and C)
G) C) and E)

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Question 42

True/False

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The Internal Revenue Code of 1986 is the name of the current tax code.

A) True
B) False

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Question 43

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An extension to file a tax return does not extend the due date for tax payments.

Revenue rulings and revenue procedures are examples of primary authorities.

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?

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:

Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income. If Tyrone's tax return is chosen for audit because of his large charitable contributions, which audit program likely identified Tyrone's tax return for audit?

For the 2014 tax returns, indicate when the statute of limitation expires and why. a. Phoenix filed his tax return on February 28, 2015. b. Jill and Randy filed their tax return on August 16, 2015. 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, 2015 but has accidentally underreported his taxable income by 30%.

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?

Which of the following is not considered a secondary authority?

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

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.

A client has recently learned of a recently 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.

Temporary Regulations have more authoritative weight than revenue rulings.

Circular 230 was issued by:

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

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Generally, code sections are arranged (grouped together) :

Office examinations are the most common type of IRS audit.

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