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

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Question 61

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Hong, an introductory tax student, is beginning his first research project. He has a complete understanding of the relevant facts for his project and has identified the initial research questions. He is now ready to begin using a tax service to identify relevant authorities. What are some suggestions for him on how to use tax services to identify relevant authorities?

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A novice may conduct a keyword search in...

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Question 62

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

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 above.

F) A) and B)
G) A) and C)

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Question 63

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Princess, who resides in the 2^nd Circuit, recently found a circuit court case that is favorable to her income tax research question. Which of the following circuits would she prefer to have issued the opinion?

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income. What are the potential ramifications to her client of this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

Of the two basic types of tax services, beginning tax researchers often prefer topical tax services.

Closed facts are especially conducive to tax planning.

Leslie made a mathematical mistake in computing her tax liability. Which audit program will likely catch Leslie's mistake?

Lindy, a tax intern, is beginning her first tax research case for her employer. Her manager has given her a basic understanding of the facts and has identified the basic research question. Lindy is now ready to begin searching for relevant tax authorities. Describe the different types of research tools available to help a tax researcher locate relevant authority and identify which type may be especially useful for Lindy.

Kim has decided to litigate a tax issue with the IRS. Describe the trial level courts that Kim may use to litigate the case.

A taxpayer can avoid a substantial understatement of tax penalty:

Under the tax law, taxpayers may be subject to both civil and criminal penalties for underpaying their tax liability (e.g., due to fraud).

Kodak is a beginning tax researcher. He knows that the 1^st step of the research process is to get an understanding of the facts surrounding the transaction being researched. Describe the two basic types of facts, the sources of facts for a research project, and any advice that may help Kodak.