Question 1

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Accepted Answer

A) True 
 B)False  True

Question 2

For the 2018 tax returns, indicate when the statute of limitation expires and why.
a. Simon filed his tax return on April 10, 2019.
b. Billy and Barbara filed their tax returns late on December 1, 2019.
c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2019 but did not report his illegal income on his tax return.
d. Luther filed his tax return on July 17, 2019 but has accidentally underreported his gross income by 20%.

Accepted Answer

(a) April 15, 2022. The statute of limit...

Question 3

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following committees typically initiates tax legislation?

Accepted Answer

A)   House Ways and Means Committee.
B)   Joint Conference Committee.
C)   Senate Finance Committee.
D)   Senate Tax Committee.
E)   None of the choices are correct.F) D) and E)
G) B) and C)

Question 5

For the following taxpayers, please recommend the most advantageous trial level court(s) to litigate a tax issue with the IRS.
a. Joe is litigating a tax issue with the IRS that is considered a question of fact (i.e., the answers depends on the facts of the case). There is not a lot of authority on point for this case but Joe has a very appealing story to justify his position that is likely to be viewed sympathetically by his peers.
b. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is very favorable to the issue that Jesse plans to litigate with the IRS.
c. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is not favorable to the issue that Hank plans to litigate with the IRS.
d. The 7ᵗʰ Circuit (where Elizabeth resides) recently issued an opinion that is very favorable to the issue that Elizabeth plans to litigate with the IRS.

Accepted Answer

(a) U.S. District Court because it is th...

Question 6

The regulation with the lowest authoritative weight is the:

Accepted Answer

A)   Procedural regulation.
B)   Interpretative regulation.
C)   Proposed regulation.
D)   Legislative regulation.
E)   None of the choices are correct.F) A) and E)
G) B) and C)

Question 7

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

Accepted Answer

A)   if the position is frivolous and disclosed on the tax return.
B)   if the position complies with the standards imposed by the applicable tax authority.
C)   only if the position meets the "more likely than not" standard.
D)   only if the position meets the "clear and convincing evidence" standard.
E)   None of the choices are correct.F) B) and E)
G) B) and C)

Question 8

Basu received a letter from the IRS that gave him the choice of (1)  paying a proposed deficiency or (2)  filing a petition with the U.S. Tax Court. Basu received the:

Accepted Answer

A)   30-day letter.
B)   90-day letter.
C)   Appeals letter.
D)   Tax adjustment letter.
E)   None of the choices are correct.F) A) and D)
G) A) and C)

Question 9

The IRS has recently completed its audit of Lorene's corporation. As a tax novice, she has very little understanding regarding the audit process and what happens next. Describe the post-audit process for Lorene and identify her options.

Accepted Answer

After the examination, the IRS agent pro...

Question 10

If April 15ᵗʰ falls on a Saturday, the due date for individual tax returns will be on Monday, April 17ᵗʰ.

Accepted Answer

A) True 
 B)False

Question 11

A tax practitioner can avoid IRS penalty relating to a tax return position:

Accepted Answer

A)   only if the position has a more likely than not chance of being sustained by the IRS or courts.
B)   if the position has a realistic possibility of being sustained by the IRS or courts.
C)   if there is not substantial authority to support the position.
D)   if the position has a reasonable basis and is disclosed on the tax return.
E)   None of the choices are correct.F) B) and D)
G) All of the above

Question 12

Generally, code sections are arranged (grouped together) :

Accepted Answer

A)   chronologically.
B)   by topic.
C)   randomly.
D)   by length.
E)   None of the choices are correct.F) A) and B)
G) B) and C)

Question 13

The tax return filing requirements for individual taxpayers only depend on the taxpayer's filing status.

Accepted Answer

A) True 
 B)False

Question 14

Houston has found conflicting authorities that address a research question for one of his clients. The majority of the authorities provide a favorable answer for his client. Nonetheless, there are several authorities that provide an unfavorable answer. Houston estimates that if the client takes the more favorable position on its tax return that there is approximately a 60 percent chance that the position will be sustained upon audit or judicial proceeding. If the client takes this position on its tax return, will Houston be subject to penalty? Will the client potentially be subject to penalty?

Accepted Answer

A tax preparer (Houston) may recommend a...

Question 15

If Paula requests an extension to file her individual tax return, the latest she could file her return without a failure-to-file penalty is:

Accepted Answer

A)   September 15ᵗʰ.
B)   October 15ᵗʰ.
C)   August 15ᵗʰ.
D)   November 15ᵗʰ.
E)   None of the choices are correct.F) D) and E)
G) A) and C)

Question 16

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Accepted Answer

A)   IRS regulations.
B)   U.S. Tax Court cases.
C)   Committee reports.
D)   IRS revenue rulings.
E)   None of the choices are correct.F) A) and E)
G) A) and D)

Question 17

Circular 230 was issued by:

Accepted Answer

A)   AICPA.
B)   State Boards of Accountancy.
C)   American Bar Association.
D)   IRS.
E)   None of the choices are correct.F) A) and D)
G) A) and B)

Question 18

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Accepted Answer

A)   Determination letter.
B)   Private letter ruling.
C)   Tax treaty.
D)   Regulation.
E)   Revenue procedure.F) None of the above
G) A) and B) C

Question 19

Henry filed his 2018 tax return on May 15ᵗʰ, 2019. The statute of limitations for IRS assessment on Henry's 2018 tax return should end:

Accepted Answer

A)   May 15ᵗʰ, 2021.
B)   April 15ᵗʰ, 2021.
C)   May 15ᵗʰ, 2022.
D)   April 15ᵗʰ, 2022.
E)   None of the choices are correct.F) A) and B)
G) A) and E)

Question 20

Carey was researching a tax issue and located what appears to be a favorable IRS regulation. He knows that regulations serve different purposes and are issued in different forms. Which purpose and which form of regulation would provide Carey the most confidence that he has found an authority that carries a lot of weight for the long term? How could Carey check the status of this regulation?

Accepted Answer

Regulations are the Treasury Department's official interpretation of the Internal Revenue Code and have the highest authoritative weight. Regulations are issued in three different forms: proposed, temporary, and final. Final regulations are regulations that have been issued in final form, and thus, until revoked, they represent the Treasury's interpretation of the Code. Temporary regulations, as the name suggests, have a limited life (three years for regulations issued after November 20, 1988). Nonetheless, during their "life," they carry the same authoritative weight as final regulations. Finally, proposed regulations are, as the name suggests, "proposed," and thus do not carry the same authoritative weight as temporary or final regulations.
In addition to being issued in three different forms, regulations also serve three basic purposes: interpretative, procedural, and legislative. Most regulations are issued as interpretative or procedural regulations. As the names suggest, interpretative regulations represent the Treasury's interpretation of the Code. Procedural Regulations explain Treasury Department procedures as they relate to administering the Code. Legislative regulations, the rarest type, are issued when Congress specifically directs the Treasury Department to create regulations to address an issue in an area of law. In these instances, the Treasury is actually writing the law instead of interpreting the Code. Because Legislative Regulations actually represent tax law instead of an interpretation of tax law, Legislative Regulations generally have been viewed to have more authoritative weight than Interpretative and Procedural Regulations. However, in Mayo Foundation for Medical Education & Research v. U.S., 131 S.Ct. 704 (2011), the Supreme Court held (subject to specific conditions) that all Treasury regulations warrant deference.
Checking the status of regulations is a bit complicated. Most tax services alert researchers if a regulation has not been updated for certain changes in the Code. If this is the case, the researcher should evaluate whether the changes in the Code make the regulation obsolete.

Exam 2: Tax Compliance, the IRS, and Tax Authorities

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Correct Answer
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True

Correct Answer
verified
(a) April 15, 2022. The statute of limit...
View Answer

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Correct Answer
verified

Which of the following committees typically initiates tax legislation?

Correct Answer
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Correct Answer
verified
(a) U.S. District Court because it is th...
View Answer

The regulation with the lowest authoritative weight is the:

Correct Answer
verified

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

Correct Answer
verified

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

Correct Answer
verified

The IRS has recently completed its audit of Lorene's corporation. As a tax novice, she has very little understanding regarding the audit process and what happens next. Describe the post-audit process for Lorene and identify her options.

Correct Answer
verified
After the examination, the IRS agent pro...
View Answer

If April 15ᵗʰ falls on a Saturday, the due date for individual tax returns will be on Monday, April 17ᵗʰ.

Correct Answer
verified

A tax practitioner can avoid IRS penalty relating to a tax return position:

Correct Answer
verified

Generally, code sections are arranged (grouped together) :

Correct Answer
verified

The tax return filing requirements for individual taxpayers only depend on the taxpayer's filing status.

Correct Answer
verified

Correct Answer
verified
A tax preparer (Houston) may recommend a...
View Answer

If Paula requests an extension to file her individual tax return, the latest she could file her return without a failure-to-file penalty is:

Correct Answer
verified

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Correct Answer
verified

Circular 230 was issued by:

Correct Answer
verified

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Correct Answer
verified
C

Henry filed his 2018 tax return on May 15ᵗʰ, 2019. The statute of limitations for IRS assessment on Henry's 2018 tax return should end:

Correct Answer
verified

Exam 2: Tax Compliance, the IRS, and Tax Authorities

If a taxpayer has little cash and a very technical tax case that she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

Correct AnswerverifiedTrue

Correct Answerverified(a) April 15, 2022. The statute of limit...View AnswerShow Answer

The Internal Revenue Code and tax treaties are examples of statutory authorities.

Correct AnswerverifiedShow Answer

Which of the following committees typically initiates tax legislation?

Correct AnswerverifiedShow Answer

Correct Answerverified(a) U.S. District Court because it is th...View AnswerShow Answer

The regulation with the lowest authoritative weight is the:

Correct AnswerverifiedShow Answer

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

Correct AnswerverifiedShow Answer

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

Correct AnswerverifiedShow Answer

The IRS has recently completed its audit of Lorene's corporation. As a tax novice, she has very little understanding regarding the audit process and what happens next. Describe the post-audit process for Lorene and identify her options.

Correct AnswerverifiedAfter the examination, the IRS agent pro...View AnswerShow Answer

If April 15ᵗʰ falls on a Saturday, the due date for individual tax returns will be on Monday, April 17ᵗʰ.

Correct AnswerverifiedShow Answer

A tax practitioner can avoid IRS penalty relating to a tax return position:

Correct AnswerverifiedShow Answer

Generally, code sections are arranged (grouped together) :

Correct AnswerverifiedShow Answer

The tax return filing requirements for individual taxpayers only depend on the taxpayer's filing status.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA tax preparer (Houston) may recommend a...View AnswerShow Answer

If Paula requests an extension to file her individual tax return, the latest she could file her return without a failure-to-file penalty is:

Correct AnswerverifiedShow Answer

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Correct AnswerverifiedShow Answer

Circular 230 was issued by:

Correct AnswerverifiedShow Answer

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Correct AnswerverifiedC

Henry filed his 2018 tax return on May 15ᵗʰ, 2019. The statute of limitations for IRS assessment on Henry's 2018 tax return should end:

Correct AnswerverifiedShow Answer

Correct Answer
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(a) April 15, 2022. The statute of limit...
View Answer

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(a) U.S. District Court because it is th...
View Answer

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After the examination, the IRS agent pro...
View Answer

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A tax preparer (Houston) may recommend a...
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C

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