Question 1

The innocent spouse relief provision from tax liability covers all of the following except

Accepted Answer

A)  improper deductions.
B)  improper credits.
C)  improper basis.
D)  All are understatements subject to minimum thresholds.E) B) and C)
F) A) and D)

Question 2

Identify which of the following statements is false.

Accepted Answer

A)  If fraud is asserted in a tax transaction,the burden of proof falls on the IRS.
B)  The civil fraud penalty consists of 75% of the tax underpayment attributable to fraud plus 25% of the interest payable on the portion of the underpayment resulting from the fraud.
C)  The government must prove its case "beyond a reasonable doubt" in order for the court or jury to convict a taxpayer of criminal fraud.
D)  The fraud penalty can be imposed with respect to income,gift,and estate tax returns.E) C) and D)
F) B) and C)

Question 3

A six-year statute of limitation rule applies if the taxpayer

Accepted Answer

A)  understates taxable income by 25%.
B)  understates AGI by 25%.
C)  understates gross income by 25%.
D)  none of the aboveE) A) and C)
F) B) and D)

Question 4

The maximum failure to file penalty is a total of 25% of the underpayment.

Accepted Answer

A) True 
 B)False

Question 5

On August 13 of the following year,Joy files her current calendar-year tax return and pays the amount due without having requested an extension.The tax shown on her return is $25,000.Her current-year withholding tax is $15,000.Joy pays no estimated taxes and does not claim any tax credits on her current- year return.Calculate the penalties that the IRS is likely to assess.Ignore the penalty for underpayment of estimated taxes.Assume she did not commit fraud.

Accepted Answer

Failure-to-pay penal...

Question 6

Which of the following communications between an accountant and client are privileged?
a)During the preparation of her 2008 tax return,Tammy informs her accountant that she contributed $25,000 to a qualified charitable organization.
b)After filing his tax return,a client mentions to his accountant that he forgot to report a $7,000 prize that he won playing bingo.He asks how he should correct the error.
c)A client tells his accountant that he will no longer pay alimony to his ex-wife.

Accepted Answer

Only communication (b)is privileged beca...

Question 7

Identify which of the following statements is false.

Accepted Answer

A)  Appeals officers usually have the operating authority to settle disputes with taxpayers based on the "hazards of litigation."
B)  When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle with the taxpayer based on the "hazards of litigation."
C)  A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question involves an especially complex tax issue.
D)  If the taxpayer and the appeals officer fail to reach agreement,the IRS issues a 90-day letter.E) B) and C)
F) B) and D)

Question 8

On August 13 of the following year,Joy files her current calendar-year tax return and pays the amount due without having requested an extension.The tax shown on her return is $25,000.Her current-year withholding tax is $15,000.Joy pays no estimated taxes and does not claim any tax credits on her current- year return.Will Joy owe interest,and if so,on what amount and for how many days?

Accepted Answer

Joy owes interest on $5,000 fr...

Question 9

The Internal Revenue Service is part of the

Accepted Answer

A)  Congress.
B)  Treasury Department.
C)  Federal Bureau of Investigation.
D)  U.S.Customs Department.E) B) and C)
F) B) and D)

Question 10

What is the requirement for a substantial understatement of tax for individuals?

Accepted Answer

A)  The understatement exceeds 10% of the tax required to be shown on the return.
B)  The understatement exceeds $5,000.
C)  The understatement exceeds the lesser of 10% of the tax required to be shown on the return or $5,000.
D)  The understatement exceeds the greater of 10% of the tax required to be shown on the return or $5,000.E) B) and C)
F) A) and D)

Question 11

What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Accepted Answer

A)  $50
B)  $250
C)  $5,000
D)  20% of the understatementE) A) and B)
F) B) and C)

Question 12

If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension,what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

Accepted Answer

A)  $0
B)  $6
C)  $60
D)  none of the aboveE) B) and D)
F) None of the above

Question 13

Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return.

Accepted Answer

A)  I only
B)  II only
C)  neither I nor II
D)  both I and IIE) B) and D)
F) None of the above

Question 14

Identify which of the following statements is false.

Accepted Answer

A)  In addition to interest,taxpayers may be subject to penalties for failure to file on time and failure to pay taxes by the due date for the return.
B)  The failure-to-file penalty is levied against taxpayers who do not file a return by its due date at a rate of 5% per month (or fraction of a month) with a maximum additional penalty of 25%.
C)  The failure-to-pay penalty is imposed at a rate of 5% per month (or fraction of a month) with a maximum penalty of 25%.
D)  A different interest rate is charged to corporate and noncorporate taxpayers.E) A) and B)
F) A) and C)

Question 15

A taxpayer's return is audited and additional taxes are assessed.The IRS also asserts that a negligence penalty should be assessed.The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence.What is the amount of the penalty for negligence?

Accepted Answer

A)  $700
B)  $1,400
C)  $5,600
D)  $1,750E) A) and D)
F) B) and D)

Question 16

Lucy files her current-year individual income tax return on August 5 of the following year,without having requested an extension.Her total tax is $10,000.Lucy pays $7,500 in a timely manner and the $2,500 balance when she files the return.Lucy did not engage in fraud and has no reasonable cause for late filing and late payment.Compute Lucy's penalties.

Accepted Answer

The answer of Lucy files her current-year individual income tax...

Question 17

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000.

Accepted Answer

A)  $7,650
B)  $7,750
C)  $8,750
D)  $11,000E) B) and C)
F) All of the above

Question 18

The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

Accepted Answer

A)  preparing federal income tax returns.
B)  determining the tax effect of proposed transactions.
C)  representing clients in criminal investigations.
D)  representing taxpayers before the U.S.Tax Court.E) A) and D)
F) A) and C)

Question 19

Identify which of the following statements is false.

Accepted Answer

A)  The majority of the individual tax returns that are audited are selected under the DIF program.
B)  The TCMP audit program has been temporarily suspended by the IRS and replaced in part by lifestyle audits.
C)  The IRS is authorized to pay a reward to individuals who provide information resulting in increased collections.
D)  All of the above are false.E) A) and B)
F) A) and C)

Question 20

Identify which of the following statements is true.

Accepted Answer

A)  The 90-day letter offers the taxpayer the choice of paying the tax assessed or filing a petition refuting the tax assessment with the Tax Court.
B)  A taxpayer can choose to initiate tax litigation in a U.S.district court,the Tax Court,or a Court of Appeals.
C)  The IRS cannot raise a new tax issue after issuance of the Statutory Notice of Deficiency (90-day letter) .
D)  All of the above are false.E) B) and D)
F) A) and B)

Exam 29: Administrative Procedures

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Joy owes interest on $5,000 fr...
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If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension,what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

Correct Answer
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A six-year statute of limitation rule applies if the taxpayer

Correct Answer
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The Internal Revenue Service is part of the

Correct Answer
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Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return.

Correct Answer
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Identify which of the following statements is false.

Correct Answer
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Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000.

Correct Answer
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Identify which of the following statements is false.

Correct Answer
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The innocent spouse relief provision from tax liability covers all of the following except

Correct Answer
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Identify which of the following statements is false.

Correct Answer
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The maximum failure to file penalty is a total of 25% of the underpayment.

Correct Answer
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A taxpayer's return is audited and additional taxes are assessed.The IRS also asserts that a negligence penalty should be assessed.The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence.What is the amount of the penalty for negligence?

Correct Answer
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Correct Answer
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Only communication (b)is privileged beca...
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Identify which of the following statements is false.

Correct Answer
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Identify which of the following statements is true.

Correct Answer
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What is the requirement for a substantial understatement of tax for individuals?

Correct Answer
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What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Correct Answer
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The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

Correct Answer
verified

Correct Answer
verified
Failure-to-pay penal...
View Answer

Correct Answer
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Exam 29: Administrative Procedures

Correct AnswerverifiedJoy owes interest on $5,000 fr...View AnswerShow Answer

If Brad files his last year's individual tax return on July 5 of the current year after having requested an extension,what is the amount of his failure-to-pay penalty if his total tax is $10,000 and he paid $9,500 through timely withholding and $500 with the return?

Correct AnswerverifiedShow Answer

A six-year statute of limitation rule applies if the taxpayer

Correct AnswerverifiedShow Answer

The Internal Revenue Service is part of the

Correct AnswerverifiedShow Answer

Which,if any,of the following could result in penalties against an income tax return preparer? I.Knowing or reckless disclosure or use of tax information obtained in preparing a return.

Correct AnswerverifiedShow Answer

Identify which of the following statements is false.

Correct AnswerverifiedShow Answer

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000.

Correct AnswerverifiedShow Answer

Identify which of the following statements is false.

Correct AnswerverifiedShow Answer

The innocent spouse relief provision from tax liability covers all of the following except

Correct AnswerverifiedShow Answer

Identify which of the following statements is false.

Correct AnswerverifiedShow Answer

The maximum failure to file penalty is a total of 25% of the underpayment.

Correct AnswerverifiedShow Answer

A taxpayer's return is audited and additional taxes are assessed.The IRS also asserts that a negligence penalty should be assessed.The taxpayer concurs with the additional $15,000 tax liability; $7,000 of this amount is attributable to negligence.What is the amount of the penalty for negligence?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedOnly communication (b)is privileged beca...View AnswerShow Answer

Identify which of the following statements is false.

Correct AnswerverifiedShow Answer

Identify which of the following statements is true.

Correct AnswerverifiedShow Answer

What is the requirement for a substantial understatement of tax for individuals?

Correct AnswerverifiedShow Answer

What is the penalty for a tax return preparer who willfully attempts to understate taxes,or intentionally disregards the tax rules and regulations?

Correct AnswerverifiedShow Answer

The "Statement on Practice in the Field of Federal Income Taxation" includes all of the following areas of mutual competence except

Correct AnswerverifiedShow Answer

Correct AnswerverifiedFailure-to-pay penal...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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Joy owes interest on $5,000 fr...
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Only communication (b)is privileged beca...
View Answer

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Failure-to-pay penal...
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