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Exam 26: Tax Practice and Ethics

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Question 81

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The tax penalty imposed on appraisers:

A) Can be as much as 200% of the appraisal fee that was charged.
B) Is waived if the taxpayer also was charged with his/her own valuation penalty.
C) Equals 25% of the appraised value of the property, with a $10,000 minimum penalty.
D) Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return.

E) B) and C)
F) All of the above

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Question 82

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

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The tax practitioner needs to study the ...

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Question 83

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Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

What are the chief responsibilities of the IRS Commissioner, and of the Chief Counsel of the IRS?

Because he undervalued property that he transferred by gift, Dan owes additional gift taxes of $4,000. The penalty for undervaluation does not apply in this situation, because the tax understatement was too small.

The taxpayer can avoid a valuation penalty for overstating the value of the charitable contribution of an artwork by showing that the deduction claimed was based on a qualified .

Yang, a calendar year taxpayer, did not file a tax return for 2007 because she honestly believed that no additional tax was due. In 2014, Yang is audited by the IRS and the agent assesses a deficiency of $17,000 for 2007. Yang need not pay this deficiency, since the three-year statute of limitations expired on April 15, 2011, meaning that the IRS no longer can adjust Yang's tax for the 2007 tax year.

The Treasury issues "private letter rulings" and other determinations, usually in response to a taxpayer request. What is the purpose of the rulings program? Answer from both the taxpayer and the government points of view.

Under Circular 230, Burke cannot complete a client's original Form 1040 and charge a fee equal to one­third of the resulting refund.

Circular 230 applies to all paid tax practitioners. But attorneys, CPAs, and enrolled agents are exempt from the Circular 230 rules, because each of the groups has its own code of professional conduct.

Which of the following statements correctly reflects the rules governing interest to be paid on an individual's Federal tax deficiency or claim for refund?

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

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters might be used. -Preparer penalty for reckless conduct.

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

Which of the following is subject to tax return preparer penalties?

Currently, the IRS charges a % interest rate on taxes that the taxpayer underpays.

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.

If the taxpayer comes to the office of the IRS for the audit of a tax return, the review is called a(n) ____________________ audit.

The accuracy-related penalties typically relate to on the part of the taxpayer, or other understatements of tax.

A registered tax return preparer who is not also a CPA, attorney, or Enrolled Agent: