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Question;2070. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #1;Margaurite did not pay her Federal income tax on time. When she eventually;filed the return, she reported a balance due. Compute Margaurite?s failure to;file penalty in each of the following cases.;a.;Two months;late, $500 additional tax due.;b.;Three months;late, $2,000 additional tax due.;c.;Ten months;late, $10,000 additional tax due.;d.;Three months;late due to fraud by Margaurite, $10,000 additional tax due.;e.;Fifteen;months late due to fraud by Margaurite, $10,000 additional tax due.;2071. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #2;Isaiah filed his Federal income tax return on time, but he did not remit the;full balance due. Compute Isaiah?s failure to pay penalty in each of the;following cases. The IRS has not yet issued a deficiency notice.;a.;Two months;late, $5,000 additional tax due.;b.;Ten months;late, $5,000 additional tax due.;c.;Five years;late, $5,000 additional tax due.;2072. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #3;Compute the failure to pay and failure to file penalties for John, who filed;his 2010 income tax return on December 14, 2011, paying the $10,000 amount due.;On April 1, 2011, John submitted a 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, 2011. John?s failure to comply with the tax laws;was not fraudulent.;2073. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #4;Marco, a cash basis, calendar year taxpayer, filed his income tax return 50;days after the due date. Marco never extended his return, and with the return;he paid the taxes that were due. What penalties will Marco incur, and how much;is the penalty if his additional tax is $5,000? Disregard any additional;interest he must pay.;2074. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #5;Bettie, a calendar year individual taxpayer, files her 2009 return on February;10, 2011. She had obtained a six-month extension for filing her return. There;was additional income tax of $20,000 due with the return.;a.;What are;Bettie?s penalties for failure to file and to pay?;b.;Would your;answer to a. change if Bettie, before the due date of the return, had;retained a CPA to prepare the return and it was the CPA?s negligence that;caused the delay?;2075. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #6;Clara underpaid her taxes by $50,000. Of this amount, $15,000 was due to;negligence on her part, as her record-keeping system is highly inadequate.;Determine the amount of any negligence;penalty;Correct;Answer;$3,000 (20% ?;$15,000).;2076. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #7;Leo underpaid his taxes by $250,000. Portions of the underpayment were;attributable to negligence ($90,000) and to civil fraud ($160,000). Compute the;total penalties incurred..;2077. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #8;Compute the overvaluation penalty for each of the following independent cases;involving the taxpayer?s reporting of the fair market value of charitable;contribution property. In each case, assume a marginal income tax rate of 35%.;Taxpayer;Corrected IRS Value;Reported Value;a.;Individual;$ 10,000;$ 20,000;b.;C;corporation;10,000;30,000;c.;S;corporation;10,000;30,000;d.;Individual;100,000;175,000;e.;Individual;100,000;250,000;f.;C;corporation;100,000;500,000;2078. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #9;Compute the undervaluation penalty for each of the following independent cases;involving the executor?s reporting of the value of a closely held business in;the decedent?s gross estate. In each case, assume a marginal estate tax rate of;45%.;Reported Value;Corrected IRS Value;a.;$10,000;$ 20,000;b.;60,000;100,000;c.;80,000;150,000;d.;50,000;300,000;2079. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #10;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.;2080. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #11;Carrie?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;Carrie?s quarterly estimated payment schedule for this year.;2081. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #12;The Square Services Corporation estimates that its 2011 taxable income will be;$1,000,000. Thus, it is subject to a flat 34% income tax rate and incurs a;$340,000 liability. For each of the following independent cases, compute;Square?s minimum quarterly estimated tax payments that will avoid an;underpayment penalty.;a.;For 2010;taxable income was ($200,000). Square carried back all of this loss to prior;years and exhausted the entire net operating loss in creating a zero 2010;liability.;b.;For 2010;taxable income was $700,000, and tax liability was $238,000.;c.;For 2009;taxable income was $2 million, and tax liability was $680,000. For 2010;taxable income was $100,000, and tax liability was $22,250.;2082. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #13;Troy Center Ltd. withheld from its employees? paychecks $200,000 in Federal;income and Social Security taxes for the Monday, June 30 payroll. It then spent;the $200,000 on equipment upgrades, missing altogether the August 2 due date;for the tax remittances. How much does Troy now owe the government in taxes and;penalties? Ignore interest accruals, and assume that the Treasury can prove;that Troy?s redirecting of the tax withholdings was willful.;2083. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #14;Loren Ltd., a calendar year taxpayer, had the following transactions, all of;which were properly reported on a timely filed return. Presuming the absence of;fraud, how much of an omission from gross income must occur for Loren before;the six-year statute of limitations applies? Show your computations.;Gross;receipts;$3,500,000;Cost of;sales;(1,000,000);Gross profit;$2,500,000;Capital gain;$100,000;Capital loss;(30,000);70,000;Total income;$2,570,000;2084. CHAPTER;17?TAX PRACTICE AND ETHICS Question PR #15;Yin-Li is the preparer of the Form 1120 for Cloves Corporation. On the return;Cloves claimed a deduction that the IRS later disallowed on audit. Compute the;tax preparer penalty that could be assessed against Yin-Li in each of the;following independent situations.;Form 8275 disclosure on the return of;the disputed deduction?;Tax reduction that resulted from the;deduction ($);Probability that the deduction would;be approved by the courts (%);Yin-Li?s fee to complete the Cloves;return ($);a.;No;40,000;75;10,000;b.;No;50,000;30;800;c.;No;60,000;30;5,000;d.;Yes;70,000;30;5,000;e.;Yes;80,000;10;5,000;2085. CHAPTER;17?TAX PRACTICE AND ETHICS Question ES #1;A tax professional needs to know how the IRS is structured and how it works to;carry out its mission. Evaluate this statement.;2086. CHAPTER;17?TAX PRACTICE AND ETHICS Question ES #2;What are the chief responsibilities of the IRS Commissioner, and of the Chief;Counsel of the IRS?;2087. CHAPTER;17?TAX PRACTICE AND ETHICS Question ES #3;The IRS periodically updates its list of ?audit initiatives,? the areas of tax;enforcement that will receive special attention during the current tax year.;List five or more of the current IRS audit initiatives.

 

Paper#59257 | Written in 18-Jul-2015

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