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Chapter 2 Tax Compliance, the IRS, and Tax Authorities




Question;1);[LO3];For each of the following citations identify the type of authority;(statutory, administrative, or;judicial) and explain the citation.;a.;Reg. Sec. 1.111-1(b);b. IRC;Sec. 469(c)(7)(B)(i);c. Rev. Rul. 82-204, 1982-2 C.B. 192;d. Amdahl Corp., 108 TC 507 (1997);e. PLR 9727004;f.;Hills v. Comm., 50 AFTR2d;82-6070 (11th Cir., 1982);[LO3] For each of the following citations identify the type of authority;(statutory, administrative, or judicial) and explain the citation.;a.;IRC Sec. 280A(c)(5);b.;Rev. Proc. 2004-34, 2004-1 C.B. 911;c. Lakewood;Associates, RIA TC Memo 95-3566.;d. TAM 200427004;e. U.S. v. Muncy, 2008-2 USTC par. 50,449;(E.D., AR, 2008);(2);LO4] Justine would like to;clarify her understanding of a code section recently enacted by Congress. What tax law sources are available to assist;Justine?;(3);[LO5] Aldina has identified;conflicting authorities that address her research question. How should she evaluate these authorities to;make a conclusion?;(4);[LO5] Georgette has identified a 1983 court;case that appears to answer her research question. What must she do to determine if the case;still represents ?current? law?;(5);[LO5] Sandy has determined that;her research question depends upon the interpretation of the phrase ?not;compensated by insurance.? What type of;research question is this?;(6);[LO5] J.C. has been a;professional gambler for many years. He;loves this line of work and believes the income is tax-free.;a. Use an available tax research service;to determine whether J.C.?s thinking is correct. Is the answer to this question found in the;Internal Revenue Code? If not, what type;of authority answers this question?;b. Write a short memo communicating the;results of your research.;(7);[LO5] Katie recently won a;ceramic dalmatian valued at $800 on a television game show. She questions whether this prize is taxable;since it was a ?gift? she won on the show.;a. Use an available tax research service;to answer Katie?s question.;b. Write a letter to Katie communicating;the results of your research.;(8);[LO5] Pierre recently received;a tax penalty for failing to file a tax return.;He was upset to receive the penalty, but he was comforted by the thought;that he will get a tax deduction for paying the penalty.;a. Use an available tax research service;to determine if Pierre is correct.;b. Write a memo communicating the;results of your research.;(9);[LO5] Paris was happy to;provide a contribution to her friend Nicole?s campaign for mayor, especially;after she learned that charitable contributions are tax deductible.;a. Use an available tax service to;determine whether Paris can deduct this contribution.;b. Write a memo communicating the;results of your research.;[LO5] Matt and Lori recently were divorced.;Although grief stricken, Matt was at least partially comforted by his;monthly receipt of $10,000 alimony. He;was particularly excited to learn from his friend, Denzel, that the alimony was;not taxable. Use an available tax;service to determine if Denzel is correct.;Would your answer change if Matt and Lori continued to live together?;[LO5] Shaun is a huge college football fan.;In the past, he has always bought football tickets on the street from;ticket scalpers. This year, he decided;to join the university?s ticket program, which requires a $2,000 contribution;to the university for the ?right? to purchase tickets. Shaun will then pay $400 per season;ticket. Shaun understands that the price;paid for the season tickets is not tax deductible as a charitable;contribution. However, contributions to;a university are typically tax deductible.;a. Use an available tax service to;determine how much, if any, of Shaun?s $2,000 contribution for the right to;purchase tickets is tax deductible.;b. Write a letter to Shaun communicating the results of your research.;(10);[LO5] Latrell recently used his;Delta Skymiles to purchase a free roundtrip ticket to Milan, Italy (value;$1,200). The frequent flyer miles used;to purchase the ticket were generated from Latrell?s business travel as a;CPA. Latrell?s employer paid for his;business trips, and he was not taxed on the travel reimbursement.;a. Use an available tax research service;to determine how much income, if any, does Latrell have to recognize as a;result of purchasing an airline ticket with Skymiles earned from business;travel.;b. Write a memo communicating the;results of your research.;(11);[LO5] Benjamin, a new staff accountant;for Local Firm CPAs, LLC, takes a CPA review course to help prepare for the CPA;exam. Benjamin is not reimbursed for the cost of the course ($1,500), but his;firm expects him to take and pass the exam.;a.;Use an available tax research;service to determine if Benjamin may deduct the cost of the CPA exam course.;b.;Write a memo communicating the;results of your research.;(12);[LO6] Randy has found;conflicting authorities that address a research question for one of his;clients. The majority of the authorities;provide an unfavorable answer for his client. Randy estimates that if the client takes the;more favorable position on its tax return that there is approximately a 48;percent chance that the position will be sustained upon audit or judicial;proceeding. If the client takes this;position on its tax return, will Randy be subject to penalty? Will the client potentially be subject to;penalty?;(13);[LO6] Using the same facts from;the previous problem, how would your answer change if Randy estimates that;there is only a 20 percent chance that the position will be sustained upon;audit or judicial proceeding?;(14);[LO7] Sasha owes additional tax;imposed in a recent audit. In addition;to the tax, will she be assessed other amounts?;If so, how will these amounts be determined?;[LO7] Maurice has a client that recently asked him about the odds of the IRS;detecting cash transactions not reported on a tax return. What are some of the issues that Maurice;should discuss with his client?


Paper#38142 | Written in 18-Jul-2015

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