Question 1

A(n)____________________ should be requested when the taxpayer wants to know the IRS interpretation of how the tax law will be applied to a proposed transaction.

Accepted Answer

The answer of A(n)____________________ should be requested when the taxpayer...

Question 2

Which statement appearing below does not correctly describe the IRS letter ruling process?

Accepted Answer

A)   They are issued by the Secretary of the Treasury Department.
B)   Some letter rulings are of such importance and general interest that they are later published (in anonymous form)  as Revenue Rulings.
C)   Letter rulings are private and can be seen only by the taxpayer who requested the ruling.
D)   Letter rulings can benefit both taxpayers and the IRS.E) None of the above
F) All of the above

Question 3

The IRS pays interest on a refund to the taxpayer,unless the IRS's payment is made within ____________________ days of the date that a return is filed.

Accepted Answer

The answer of The IRS pays interest on a refund...

Question 4

When a tax issue is taken to court,the burden of proof is on the taxpayer to show that the items reported on the return are correct.

Accepted Answer

A) True 
 B)False

Question 5

According to AICPA rules,the CPA cannot take an aggressive tax return position on the basis of the "audit ____________________."

Accepted Answer

The answer of According to AICPA rules,the CPA cannot take...

Question 6

Quon filed an amended return,claiming a $100,000 refund.The IRS disallowed the refund,and it can assess a penalty if there was no reasonable basis of support for the refund claim,in the amount of ____________________% of the disallowed amount.
or

Accepted Answer

The answer of Quon filed an amended return,claiming a $100,000...

Question 7

The IRS is one of the largest Federal agencies,employing at least ____________________ people throughout the year.
or
or

Accepted Answer

85,000 87,...

Question 8

When the IRS issues a notice of tax due,the taxpayer has 30 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "thirty-day letter."

Accepted Answer

A) True 
 B)False

Question 9

Bettie,a calendar year individual taxpayer,files her 2009 return on February 10,2011.She had obtained a six-month extension for filing her return.There was additional income tax of $20,000 due with the return.

Accepted Answer

The answer of Bettie,a calendar year individual taxpayer,files her 2009...

Question 10

Keepert uses "two sets of books." She only reports one-half of her cash sales on the records that she uses to complete her Federal income tax return.The statute of limitations for Keepert's return is six years.

Accepted Answer

A) True 
 B)False

Question 11

A penalty can be assessed from an appraiser who knew that his/her improper appraisal would be used as part of a tax computation,in the amount of the lesser of ____________________% of the tax understatement or ____________________ % of the appraisal fee collected.
or

Accepted Answer

10,125 ten...

Question 12

A tax professional needs to know how the IRS is structured and how it works to carry out its mission.Evaluate this statement.

Accepted Answer

The tax practitioner...

Question 13

The taxpayer can use a(n)____________________ to pay off a deficiency over a longer period of time,if the IRS believes that this will facilitate the tax collection process.

Accepted Answer

The answer of The taxpayer can use a(n)____________________ to pay...

Question 14

Last year,Ned's property tax deduction on his residence was $22,500.Although he lives in the same house,he tells his CPA that this year's taxes will be only $7,500.The CPA can use this estimate in computing Ned's itemized deductions,under the Statements of Standards for Tax Services.

Accepted Answer

A) True 
 B)False

Question 15

The basic Treasury document regulating tax preparers is the Regulation known as _________________________.

Accepted Answer

The answer of The basic Treasury document regulating tax preparers...

Question 16

The IRS can pay an informant's fee of up to ____________________% of the recovered tax,interest,and penalty amounts.In the typical year,about ____________________ such rewards are paid.The reward can be as high as ____________________% for information provided by a "whistle blower."
or

Accepted Answer

15,500,30 ...

Question 17

Which of the following statements is incorrect as to the conduct of IRS income tax audits?

Accepted Answer

A)   Only the Appeals Division of the IRS has the authority to settle tax disputes based on the hazards of litigation.
B)   The IRS publishes the factors its computers use for audit selection purposes annually in the Commissioner's Report.
C)   For a Form 1040 that is filed on April 11, 2012, if the taxpayer has not received an audit notification from the IRS by the end of 2012, the return may still be audited.
D)   Most IRS examinations of Forms 1040 are conducted solely through the mail.E) A) and B)
F) A) and C)

Question 18

The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return.Describe how these penalties work.

Accepted Answer

Several penalties mi...

Question 19

George,a calendar year taxpayer subject to a 45% marginal gift tax rate,made a gift of a sculpture to Redd,valuing the property at $100,000.The IRS later valued the gift at $140,000.The applicable undervaluation penalty is:

Accepted Answer

A)   $7,200.
B)   $3,600.
C)   $1,000 (minimum penalty) .
D)   $0.E) A) and D)
F) All of the above

Question 20

The IRS employs almost 90,000 personnel,making it one of the largest Federal agencies.

Accepted Answer

A) True 
 B)False

Exam 26: Tax Practice and Ethics

Which statement appearing below does not correctly describe the IRS letter ruling process?

Correct AnswerverifiedShow Answer

A tax professional needs to know how the IRS is structured and how it works to carry out its mission.Evaluate this statement.

Correct AnswerverifiedThe tax practitioner...View AnswerShow Answer

When a tax issue is taken to court,the burden of proof is on the taxpayer to show that the items reported on the return are correct.

Correct AnswerverifiedShow Answer

Quon filed an amended return,claiming a $100,000 refund.The IRS disallowed the refund,and it can assess a penalty if there was no reasonable basis of support for the refund claim,in the amount of ____________________% of the disallowed amount. or

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect as to the conduct of IRS income tax audits?

Correct AnswerverifiedShow Answer

When the IRS issues a notice of tax due,the taxpayer has 30 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "thirty-day letter."

Correct AnswerverifiedShow Answer

The taxpayer can use a(n)____________________ to pay off a deficiency over a longer period of time,if the IRS believes that this will facilitate the tax collection process.

Correct AnswerverifiedShow Answer

The IRS can pay an informant's fee of up to ____________________% of the recovered tax,interest,and penalty amounts.In the typical year,about ____________________ such rewards are paid.The reward can be as high as ____________________% for information provided by a "whistle blower." or

Correct Answerverified15,500,30 ...View AnswerShow Answer

George,a calendar year taxpayer subject to a 45% marginal gift tax rate,made a gift of a sculpture to Redd,valuing the property at $100,000.The IRS later valued the gift at $140,000.The applicable undervaluation penalty is:

Correct AnswerverifiedShow Answer

Keepert uses "two sets of books." She only reports one-half of her cash sales on the records that she uses to complete her Federal income tax return.The statute of limitations for Keepert's return is six years.

Correct AnswerverifiedShow Answer

The IRS employs almost 90,000 personnel,making it one of the largest Federal agencies.

Correct AnswerverifiedShow Answer

The IRS is one of the largest Federal agencies,employing at least ____________________ people throughout the year. or or

Correct Answerverified85,000 87,...View AnswerShow Answer

The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return.Describe how these penalties work.

Correct AnswerverifiedSeveral penalties mi...View AnswerShow Answer

A(n)____________________ should be requested when the taxpayer wants to know the IRS interpretation of how the tax law will be applied to a proposed transaction.

Correct AnswerverifiedShow Answer

Bettie,a calendar year individual taxpayer,files her 2009 return on February 10,2011.She had obtained a six-month extension for filing her return.There was additional income tax of $20,000 due with the return.

Correct AnswerverifiedShow Answer

The basic Treasury document regulating tax preparers is the Regulation known as _________________________.

Correct AnswerverifiedShow Answer

The IRS pays interest on a refund to the taxpayer,unless the IRS's payment is made within ____________________ days of the date that a return is filed.

Correct AnswerverifiedShow Answer

Last year,Ned's property tax deduction on his residence was $22,500.Although he lives in the same house,he tells his CPA that this year's taxes will be only $7,500.The CPA can use this estimate in computing Ned's itemized deductions,under the Statements of Standards for Tax Services.

Correct AnswerverifiedShow Answer

According to AICPA rules,the CPA cannot take an aggressive tax return position on the basis of the "audit ____________________."

Correct AnswerverifiedShow Answer

A penalty can be assessed from an appraiser who knew that his/her improper appraisal would be used as part of a tax computation,in the amount of the lesser of ____________________% of the tax understatement or ____________________ % of the appraisal fee collected. or

Correct Answerverified10,125 ten...View AnswerShow Answer

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The IRS can pay an informant's fee of up to % of the recovered tax,interest,and penalty amounts.In the typical year,about such rewards are paid.The reward can be as high as % for information provided by a "whistle blower." or

Correct Answer
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15,500,30 ...
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Several penalties mi...
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A penalty can be assessed from an appraiser who knew that his/her improper appraisal would be used as part of a tax computation,in the amount of the lesser of % of the tax understatement or % of the appraisal fee collected. or

Correct Answer
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10,125 ten...
View Answer