FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Tax Practice and Ethics

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Roger prepared for compensation a Federal income tax return for Joan.Joan's return included an aggressive interpretation of the rules concerning overnight business travel.Roger is not liable for a preparer penalty for taking an unreasonable tax return position if:

A) Joan is assessed her own penalty for an understatement of tax due to disregard of IRS rules.
B) There was a reasonable basis for Joan's interpretation of the travel deduction rules,and Joan disclosed the position in an attachment to the return.
C) The tax reduction attributable to the disputed deduction did not exceed $5,000.
D) The IRS found that the travel deduction was frivolous,but Joan disclosed the position in an attachment to the return.

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

Correct Answer

verified

Show Answer

Question 22

Essay

Review LaterAdd Note

Review Later

In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

Correct Answer

verified

The defenses to the ...

View Answer

Show Answer

Question 23

True/False

Review LaterAdd Note

Under Circular 230,a return must be signed as a preparer,even if it was completed for no charge as a favor to a friend or relative.

Concerning the penalty for civil fraud applicable to taxpayers:

How do rulings issued by the IRS benefit both the taxpayer and the IRS?

Orange Ltd.withheld from its employees' paychecks $300,000 in Federal income and Social Security taxes for the May 30 payroll.It then spent the $300,000 on equipment upgrades,missing altogether the June 2 due date for the tax remittances.How much does Orange now owe the government in taxes and penalties? Ignore interest accruals,and assume that the Treasury can prove that Orange's redirecting of the tax withholdings was willful.

Arnold made a charitable contribution of property that he valued at $70,000.He deducted this amount as an itemized deduction on his tax return.The IRS can show that the actual value of the property is $50,000.Arnold is in the 35% income tax bracket.Determine Arnold's amount due for both tax and any penalty.

Harold,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $18,000 for a sculpture that the IRS later valued at $10,000.The applicable overvaluation penalty is:

List several current initiatives that the IRS has undertaken in its effort to enforce the revenue laws of the U.S.

After a tax audit,the taxpayer receives the Revenue Agent's Report and a "30-day letter."

Carol's AGI last year was $180,000.Her Federal income tax came to $60,000,which she paid through a combination of withholding and estimated payments.This year,her AGI will be $250,000,with a projected tax liability of $80,000,all to be paid through estimates.Ignore the annualized income method.Compute Carol's quarterly estimated payment schedule for this year.

The usual three-year statute of limitations on additional tax assessments applies in the following situation(s) .

In the case of bad debts and worthless securities,the statute of limitations on claims for refund is seven years.

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:

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

One of the four operating divisions of the IRS deals exclusively with the largest corporations and partnerships.

Compute the failure to pay and failure to file penalties for John,who filed his 2009 income tax return on December 17,2010,paying the $10,000 amount due.On April 1,2010,the IRS approved John's six-month extension of time in which to file his return;he paid no tax with the extension request.He has no reasonable cause for failing to file his return by October 15 or for failing to pay the tax that was due on April 15,2010.John's failure to comply with the tax laws was not fraudulent.

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 substantiated.

The rules of Circular 230 need not be followed by:

Most practitioners encourage their clients to attend an IRS office audit.