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Exam 17: Tax Practice and Ethics

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Question 31

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A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a__________ for the taxpayer's position.

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Question 32

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Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. -Failure to pay a tax.

A) Taxpayer penalty
B) Tax preparer penalty
C) Appraiser's penalty

D) A) and B)
E) A) and C)

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Question 33

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Circular 230 compliance implies that a tax preparer provide training for the tax staff as to the latest changes in the tax law.

A penalty can be assessed on an appraiser who knew that her or his 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.

For purposes of tax penalties, a VITA volunteer is not classified as a tax return ____________________.

The government can appeal a decision of the Tax Court Small Cases Division, but the taxpayer cannot.

Taxpayer's must pay a significant fee to have a letter ruling issued by the IRS.

The tax professional can reduce the chances that staff personnel will incur IRS preparer penalties by adopting a "tone at the top" that stresses integrity, diligence, and other elements of an ethical tax practice.

Young-Eagle files her 2018 Form 1040 on March 1, 2019. The Federal tax statute of limitations for this return expires on:

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 need be used. -Negligence in filing a return.

About ______% of all Forms 1040 are audited each year. The rate is about ____________________% for large corporations.

IRS computers use document matching programs for both individuals and business taxpayers to keep the audit rate low.

In taking a dispute to the Appeals Division, a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

A CPA can take a tax return position for a client that is contrary to current IRS interpretations of the law.

A negligence penalty is assessed when the taxpayer is found not to have made a reasonable attempt to comply with the tax law.

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____________ .

Jaime's negligence penalty will be waived under the reasonable cause exception. He told the court, "My taxes were wrong because I couldn't understand the tax law."

An) __________must obtain a Preparer Tax Identification Number PTIN).

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. -Substantial understatement of a tax.

When a tax dispute is resolved, interest is paid by or to the government. How are IRS interest amounts determined? To which tax amounts do they apply?