Details of this Paper

Law question data bank

Description

solution


Question

Question;1994. Question;MC #1;The Chief Counsel of the IRS is appointed by the;a.;Secretary of the Treasury Department.;b. U. S. Senate.;c. U. S. House of Representatives.;d. U. S. President.;e. American Bar Association President.;1995. Question;MC #2;Which statement appearing below does not;correctly describe the IRS letter ruling process?;a.;They are issued by the Secretary of the Treasury Department.;b. Some letter rulings are of such;importance and general interest that they are later published (in anonymous;form) as Revenue Rulings.;c. Letter rulings are private and can be;seen only by the taxpayer who requested the ruling.;d. Letter rulings can benefit both;taxpayers and the IRS.;1996. Question;MC #3;Which of the following statements is incorrect;as to the conduct of IRS income tax audits?;a.;Only the Appeals Division of the IRS has the authority to settle tax disputes;based on the hazards of litigation.;b. The IRS publishes the factors its;computers use for audit selection purposes annually in the Commissioner?s Report.;c. For a Form 1040 that is filed on;April 11, 2012, if the taxpayer has not received an audit notification from the;IRS by the end of 2012, the return may still be audited.;d. Most IRS examinations of Forms 1040;are conducted solely through the mail.;1997. Question;MC #4;Which of the following statements is correct;as to the conduct of IRS income tax audits?;a.;Office audits are conducted at the office of the IRS.;b. The most common type of Federal;income tax audit is the field audit.;c. An office audit typically is used for;a business taxpayer.;d. A correspondence audit usually is;concluded after a meeting with the taxpayer at the IRS auditor?s office.;1998. Question;MC #5;With respect to the Small Cases Division of the Tax Court;a.;The taxpayer (but not the IRS) can appeal a contrary judgment.;b. The IRS (but not the taxpayer) can;appeal a contrary judgment.;c. Either the IRS or the taxpayer can;appeal a contrary judgment.;d. Neither the IRS nor the taxpayer can;appeal a contrary judgment.;1999. Question;MC #6;Which of the following statements correctly reflects the rules governing interest;to be paid on an individual?s Federal tax deficiency or claim for refund?;a.;The IRS has full discretion in determining the rate that will apply.;b. The simple interest method for;calculating interest is used.;c. The rate of interest for assessments;is one percentage point lower than the rate of interest for refunds.;d. The IRS adjusts the rate of interest;quarterly.;2000. Question;MC #7;Which of the following statements does;not reflect the rules governing the accuracy-related penalty for;negligence?;a.;The penalty rate is 20%.;b. The penalty is imposed only on the;part of the deficiency attributable to negligence.;c. The penalty applies only to;intentional tax understatements by the taxpayer.;d. The penalty is waived if the taxpayer;uses Form 8275 to disclose a return position that is reasonable though contrary;to the IRS position.;2001. Question;MC #8;The penalty for substantial understatement of tax liability does not apply if;a.;The taxpayer has substantial authority for the treatment taken on the tax;return.;b. The relevant facts affecting the;treatment are adequately disclosed in the return or on Form 8275.;c. The IRS failed to meet its burden of;proof in showing the taxpayer?s error.;d. All of the above statements are;correct.;e. None of the above statements are;correct.;2002. Question;MC #9;Ming (a calendar year taxpayer) donates a painting to a local art museum (a;qualified charity). The painting cost Ming $2,000 ten years ago and, according;to one of Ming?s friends (an amateur artist), is worth $40,000. On his income;tax return, Ming deducts $40,000 as a Form 1040 charitable contribution. Upon;later audit by the IRS, it is determined that the true value of the painting;was $30,000. Assuming that Ming is subject to a 30% marginal Federal income tax;rate, his penalty for overvaluation is;a.;$5,000.;b. $2,000.;c. $1,000.;d. $0.;e. $10,000 (minimum penalty).;2003. Question;MC #10;Harold, a calendar year taxpayer subject to a 35% marginal tax rate, claimed a;Form 1040 charitable contribution deduction of $20,000 for a sculpture that the;IRS later valued at $10,000. The applicable overvaluation penalty is;a.;$10,000.;b. $7,000.;c. $3,500.;d. $0.;2004. Question;MC #11;Maureen, a calendar year taxpayer subject to a 35% marginal tax rate, claimed a;Form 1040 charitable contribution deduction of $250,000 for a sculpture that;the IRS later valued at $200,000. The applicable overvaluation penalty is;a.;$17,500.;b. $14,000.;c. $3,500.;d. $0.;2005. Question;MC #12;Ron, a calendar year taxpayer subject to a 35% marginal tax rate, claimed a;Form 1040 charitable contribution deduction of $250,000 for a sculpture that;the IRS later valued at $150,000. The applicable overvaluation penalty is;a.;$0.;b. $7,000.;c. $10,000 (maximum penalty).;d. $14,000.;2006. Question;MC #13;Gloria, a calendar year taxpayer subject to a 35% marginal income tax rate;claimed a Form 1040 charitable contribution deduction of $800,000 for a;sculpture that the IRS later valued at $100,000. The applicable overvaluation;penalty is;a.;$245,000.;b. $98,000.;c. $49,000.;d. $10,000 (maximum penalty).;2007. Question;MC #14;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;a.;$7,200.;b. $3,600.;c. $1,000 (minimum penalty).;d. $0.;2008. Question;MC #15;Leroy, who is subject to a 45% marginal gift tax rate, made a gift of a;sculpture to Marvin, valuing the property at $150,000. The IRS later valued the;gift at $400,000. The applicable undervaluation penalty is;a.;$0.;b. $22,500.;c. $25,000 (maximum penalty).;d. $45,000.;2009. Question;MC #16;Juanita, who is subject to a 45% marginal gift tax rate, made a gift of a;sculpture to Bianca, valuing the property at $150,000. The IRS later valued the;gift at $300,000. The applicable undervaluation penalty is;a.;$27,000.;b. $13,500.;c. $10,000 (maximum penalty).;d. $0.;2010. Question;MC #17;The special tax penalty imposed on appraisers;a.;Is waived if the taxpayer also was charged with his/her own valuation penalty.;b. Applies if the appraiser knew that;the appraisal would be used in preparing a Federal income tax return.;c. Equals 10% of the appraised value of;the property, with a $5,000 minimum penalty.;d. Can be as much as 200% of the appraisal;fee that was charged.;2011. Question;MC #18;Concerning the penalty for civil tax fraud;a.;Fraudulent behavior is more than mere negligence on the part of the taxpayer.;b. The burden of proof to establish the;penalty is on the government.;c. The penalty is 100% of the;underpayment.;d. Fraud is defined in Code ?? 6663(b);and (f).;2012. Question;MC #19;Concerning a taxpayer?s requirement to make quarterly estimated tax payments;a.;An individual must make estimated payments if his or her balance due for the;Federal income tax for the year will exceed $1,000.;b. The due dates of the payments for a;calendar-year C corporation are March, June, September, and December 15.;c. A C corporation must make estimated;payments if its Federal income tax liability for the year will exceed $250.;d. A trust is not required to make;estimated payments.;2013. Question;MC #20;Mickey, a calendar year taxpayer, was not required to file a 2010 Federal;income tax return. During 2011, his AGI is $120,000 and his tax liability is;$20,000. To avoid a penalty for tax underpayments for 2011, Mickey must make;aggregate estimated tax payments of at least;a.;$0.;b. $1,000 (minimum amount).;c. $18,000.;d. $20,000.;2014. Question;MC #21;Mickey, a calendar year taxpayer, filed a return correctly showing no Federal;income tax liability for 2010. During 2011, his AGI is $120,000 and his tax;liability is $20,000. To avoid a penalty for 2011, Mickey must make aggregate;estimated tax payments of at least;a.;$0.;b. $1,000 (minimum amount).;c. $18,000.;d. $20,000.;2015. Question;MC #22;The usual three-year statute of limitations on additional tax assessments;applies in the following situation(s).;a.;No return at all is filed.;b. An investment in a marketable;security is worthless.;c. Taxpayer inadvertently omits an;amount of gross income equal to 30% of the gross income stated on the return.;d. Taxpayer discovers an inadvertent;overstatement of deductions equal to 30% of gross income.;2016. Question;MC #23;Jake, an individual calendar year taxpayer, incurred the following;transactions.;Gross receipts;$800,000;Less: Cost of sales;(300,000);Net business income;$500,000;Capital gain;$30,000;Capital loss;(90,000);(60,000);Total income;$440,000;Assuming that any error in timely reporting these amounts was inadvertent, how;much omission from gross income would be required before the six-year statute;of limitations would apply?;a.;More than $110,000.;b. More than $132,500.;c. More than $207,500.;d. The six-year rule does not apply;here.;2017. Question;MC #24;Vera is audited by the IRS for several tax years. Her returns were prepared by;the following parties.;Tax;Year;Preparer;1;Sally (Vera?s niece, a dentist);2;Wesley (pastor of Vera?s church);3;Alex (a CPA);Which of the following statements is correct?;a.;Sally may represent Vera for tax year 1. Such representation may extend through;the Appeals Division of the IRS.;b. Wesley may represent Vera for all tax;years under audit.;c. Alex can only represent Vera for tax;year 3.;d. Vera may represent herself for all;tax years involved.;2018. Question;MC #25;The rules of Circular 230 need not be;followed by which of the following paid tax preparers?;a.;A CPA.;b. A Wal-Mart cashier who e-files 15 tax;returns for her paying clients per filing season.;c. An enrolled agent.;d. All of the above are subject to the;Circular 230 rules.;2019. Question;MC #26;Circular 230 allows a tax preparer to;a.;Take a position on a tax return that is contrary to a decision of the U.S.;Supreme Court.;b. Operate the ?Tax Nerd?s Blog? on the;Internet.;c. Charge a $5,000 fee to prepare a Form;1040EZ.;d. Avoid signing a tax return that is;likely to be audited.;2020. Question;MC #27;A tax preparer is in violation of Circular 230 if he or she;a.;Files a tax return that includes a math error.;b. Charges a fee to prepare an original;Form 1120 equal to one-third of the taxpayer?s refund due.;c. Fails to inform the IRS of an error;on the client?s prior-year return.;d. All of the above are Circular 230;violations.;2021. Question;MC #28;Which of the following is subject to tax return preparer penalties?;a.;Lizzie, the firm?s administrative assistant, makes copies of returns and;assembles the mailings that the client must make to the taxing agencies.;b. Meredith is the director of Federal;taxes for a C corporation.;c. Sammy is a volunteer who prepares;returns at the retirement home under the IRS Tax Counseling for the Elderly;program.;d. Abbie prepares her mother?s tax;returns for $50 a year. A CPA, Abbie would charge a client $750 for completing;a similar return.;2022. Question;MC #29;Megan prepared for compensation a Federal income tax return for Joan. Joan?s;return included an aggressive interpretation of the rules concerning overnight;business travel. Megan is not liable for a preparer penalty for taking an;unreasonable tax return position if;a.;The tax reduction attributable to the disputed deduction did not exceed $5,000.;b. There was a reasonable basis for;Joan?s interpretation of the travel deduction rules.;c. There was substantial authority for;Joan?s interpretation of the travel deduction rules.;d. The IRS found that the travel;deduction was frivolous, but Joan disclosed the position in an attachment to;the return.;2023. Question;MC #30;Roger prepared for compensation a Federal income tax return for Mona. Mona?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.;The tax reduction attributable to the disputed deduction did not exceed $5,000.;b. Mona is assessed her own penalty for;an understatement of tax due to disregard of IRS rules.;c. There was a reasonable basis for;Mona?s interpretation of the travel deduction rules, and Mona disclosed the;position in an attachment to the return.;d. The IRS found that the travel;deduction was frivolous, but Mona disclosed the position in an attachment to;the return.;2024. Question;MC #31;Freddie has been assessed a preparer penalty for willful and reckless conduct.;When he completed Peggy?s Federal income tax return (who is in the 35% tax;bracket), Freddie purposely omitted $100,000 of cash receipts that should have;been reported as gross income. Freddie charged Peggy $6,000 to prepare the;return. What is Freddie?s preparer penalty?;a.;$0, because Peggy incurred her own understatement penalty for the return.;b. $3,000.;c. $5,000.;d. $17,500.;2025. Question;MC #32;The privilege of confidentiality applies to a CPA tax preparer concerning the;client?s information relative to;a.;Financial accounting tax accrual workpapers.;b. A tax research memo used to determine;an amount reported on the tax return.;c. Building a defense against a penalty;assessed for the use of a tax shelter.;d. Building a defense against a charge;brought by the SEC.;2026. Question;MC #33;The Statements on Standards for Tax Services are issued by the;a.;IRS.;b. AICPA.;c. ABA.;d. SEC.

 

Paper#59255 | Written in 18-Jul-2015

Price : $22
SiteLock