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tax questions....




Question;136. State and;local governments are sometimes forced to find ways to generate additional;revenue. Comment on the pros and cons of the following procedures;a. Decouple;what would be part of the piggyback format of the state income tax.;b. Tax;amnesty provisions.;c. Internet;shaming.;137. Briana;lives in one state and works in the adjoining state. Both states tax the income;she earns from her job. Does Briana have any relief from this apparent double;taxation of the same income?;138. In late;June 2014, Art is audited by the state and a large deficiency is assessed. In;November of the same year, his Federal income tax return is audited by the IRS.;What has probably happened?;139. Two months;after the burglary of his personal residence, Eric is audited by the IRS. Among;the items taken in the burglary was a shoe box containing approximately $50,000;in cash. Eric is the owner and operator of a cash-and- carry liquor store. Eric;wonders why he was audited. Can you help explain?;140. Tracy has;just been audited and the IRS agent has issued an RAR that assesses a large;deficiency. Since Tracy disagrees with the result, her next step is to go to;court. Do you agree?;141. Can a;taxpayer start the 3-year statute of limitations on additional assessments by;the IRS by filing his income tax return early (i.e., before the due date)? Can;the period be shortened by filing late (i.e., after the due date)?;142. Brayden;files his Federal income tax return by April 15, but does not pay the tax.;Although he expects to pay interest on the large amount of tax he still owes;he feels that the timely filing has avoided any penalties. Is Brayden?s;assumption correct?;143. Melinda has;been referred to you by one of your clients. In the past, she has prepared her;own income tax returns, but she has become overwhelmed by the increased;complexity of the tax law. Consequently, Melinda wants you to prepare her;return for calendar year 2014. In reviewing her 2013 return, you note that she;has claimed as a deduction the entire cost of a business building that should;have been capitalized and depreciated. What course of action should you follow?;144. Your;client, Connie, won $12,000 in a football office pool. She sees no reason to;include it in her income for several reasons. First, the amount won will not be;reported to the IRS. Second, as an average income employee, she is unlikely to;be audited by the IRS. Third, she feels that she has probably lost this much in;other past office pools. How do you respond?;ANSWER: As a;practitioner, you cannot play the audit lottery. You must presume she will be;audited irrespective of the probabilities. Although the use of estimates is;allowed, Connie?s assumptions as to her losses are not realistic. Even if they;were reliable, gambling losses cannot be offset against gambling winnings but;must be separately deducted. Thus, the $12,000 must be reported as income or;you cannot prepare Connie?s return.;145. Under what;conditions is it permissible, from an ethical standpoint, for a CPA firm to;outsource tax return preparation to a third party?;146. In terms of;revenue neutrality, comment on a tax cut enacted by Congress that;a. contains;revenue offsets.;b. includes;a sunset provision.;147. The tax law;contains various tax credits, deductions, and exclusions that are designed to;encourage taxpayers to obtain additional education. On what grounds can these;provisions be justified?;148. The tax law;contains various provisions that encourage home ownership.;a. On what;basis can this objective be justified?;b. Are there;any negative considerations? Explain..;149. The tax law;allows an income tax deduction (or a credit) for foreign income taxes. Explain;why.;150. The tax law;allows, under certain conditions, deferral of gain recognition for involuntary;conversions.;a. What is;the justification for this relief measure?;b. What;happens if the proceeds are not entirely reinvested?;?;151. How do the;net operating loss provisions in the tax law mitigate the effect of the annual;accounting concept?;152. In;connection with facilitating the function of the IRS in the administration of;the tax laws, comment on the utility of the following;a. An;increase in the amount of the standard deduction.;b. Dollar;and percentage limitations on the deduction of personal casualty losses.;c. Availability;of interest and penalties for taxpayer noncompliance.;Match the statements that relate to each other. Note: Some;choices may be used more than once or not at all.;d. Deferral;of gains from involuntary conversions;e. Carryback;and carryforward of net operating losses;f. ?No;change? is one possible result;g. State;income tax applied to visiting nonresident;h. IRS;special agent;i. Undoing;the ?piggyback? result;j. Ideal;budget goal as to new tax legislation;k. Every;state that has a general sales tax has one;l. Imposed;by all states and the Federal government;m. Imposed by;some states but not the Federal government;n. Imposed;only by the Federal government;o. No;correct match provided;153. Jock tax;154. Decoupling;155. DIF;156. Tax fraud;suspected;157. Revenue;neutrality;158. RAR;159. Wherewithal;to pay concept;160. Mitigation;of the annual accounting period concept;161. Tax on;transfers at death (inheritance type);162. Excise tax;on tobacco;?;163. Use tax;164. Income tax;amnesty;165. Import;taxes (customs duties);166.;?Pay?as?you?go? (paygo);167. Export;taxes;Match the statements that relate to each other. Note: Some;choices may be used more than once.;a. 3 years;from date return is filed;b. 3 years;from due date of return;c. 20% of;underpayment;d. 5% per;month (25% limit);e. 0.5% per;month (25% limit);f. Conducted;at IRS office;g. Conducted;at taxpayer?s office;h. 6 years;i. 45-day;grace period allowed to IRS;j. No;statute of limitations (period remains open);k. 75% of;underpayment;l. No;correct match provided;168. Office;audit;169. Field audit;170. Failure to;file penalty;171. Failure to;pay penalty;172. Negligence;penalty;173. Criminal;fraud penalty;174. Fraud and;statute of limitations;175. Early;filing and statute of limitations (deficiency situations);176. Late filing;and statute limitations (deficiency situations);177. No return;and statute limitations;178. More than;25% gross income omission and statute of limitations;179. Interest;due on refund;Using the choices provided below, show the justification for;each provision of the tax law listed.;a. Economic;considerations;b. Social;considerations;c. Equity;considerations;180. A tax;credit for amounts spent to furnish care for children while the parent is at;work.;181. Additional;depreciation deduction allowed for the year the asset is acquired.;182. Tax;brackets are increased for inflation.;183. A small;business corporation can elect to avoid the corporate income tax.;184. A deduction;for contributions by an employee to certain retirement plans.;185. A deduction;for qualified tuition paid to obtain higher education.;186. A deduction;for certain expenses (interest and taxes) incident to home ownership.;187. A Federal;deduction for state and local income taxes paid.;?;188. A deduction;for certain income from manufacturing activities.;A bribe to the local sheriff, although business related, is;not deductible.;189. Contributions;to charitable organizations are deductible.;190. A Federal;deduction for state and local sales taxes paid.;191. Tax credits;available for the purchase of a vehicle that uses alternative (non-fossil);fuels.;192. Tax credits;for home improvements that conserve energy.;193. More rapid;expensing for tax purposes of the costs of installing pollution control;devices.


Paper#39450 | Written in 18-Jul-2015

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