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Federal tax problems




Question;139.;Rick, the sole proprietor of an adult entertainment club, is;audited by the IRS. On the third day of the field audit, the regular IRS;agent is accompanied by a special agent. Should Rick be concerned by this new;development? 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 2013. In reviewing her 2012;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?;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.;153.;Congress reacts to judicial decisions that interpret the tax law;in different ways. When it approves of a decision, Congress may act to amend;the Code to incorporate the holding. When it disapproves, Congress may amend;the Code to nullify its effect. Give an example of each one of these;congressional reactions.


Paper#41997 | Written in 18-Jul-2015

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