Question 1

Tax avoidance and tax evasion are both illegal.

Accepted Answer

A) True 
 B)False

Question 2

The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.

Accepted Answer

A) True 
 B)False

Question 3

A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer's estimates.

Accepted Answer

A) True 
 B)False

Question 4

What standard must tax practitioners meet under Section 6694 (preparer penalties) of the Internal Revenue Code with respect to undisclosed positions taken on tax returns?

Accepted Answer

Tax return positions which are not discl...

Question 5

An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.

Accepted Answer

A) True 
 B)False

Question 6

Who may represent a taxpayer before the IRS in cases which go beyond the examination of the return?

Accepted Answer

Under Circular 230, the following indivi...

Question 7

Tax practice can be defined as the application of the tax laws to specific accounting situations.

Accepted Answer

A) True 
 B)False  True

Question 8

The Statements on Standards for Tax Services are:

Accepted Answer

A)   part of the ABA Code of Professional Responsibility
B)   intended to replace Circular 230
C)   intended to supplement the AICPA Code of Professional Conduct and Circular 230
D)   none of the aboveE) B) and D)
F) A) and B) C

Question 9

Tax litigation is a process of:

Accepted Answer

A)   participating in an administrative audit
B)   settling tax-related disputes in a court of law
C)   filing amended tax returns as prescribed by tax laws
D)   arranging a taxpayer's affairs to minimize tax liabilitiesE) A) and C)
F) B) and D)

Question 10

In a closed transaction, the scope of tax planning is:

Accepted Answer

A)   more limited as compared to an open transaction
B)   limited by the IRS rules of practice
C)   limited to presenting the taxpayer's facts to the government in the most favorable, legal manner
D)   Only a and cE) A) and D)
F) A) and B)

Question 11

The primary change made by the Sarbanes-Oxley Act which affects the practice of public accounting is:

Accepted Answer

A)   Public accounting firms may no longer provide any actuarial services.
B)   Accounting firms may no longer offer tax shelters.
C)   Auditors may never do tax compliance work for their clients.
D)   Public accounting firms may provide some nonaudit services to their audit clients if the services are approved in advance by an audit committee.E) A) and C)
F) A) and D)

Question 12

Explain the AICPA guidelines under SSTS No. 3 for relying without verification on taxpayer or third party information when preparing a tax return.

Accepted Answer

In preparing or signing a return, an AIC...

Question 13

An unenrolled tax return preparer can make an appearance as the taxpayer's representative only before the:

Accepted Answer

A)   Examination Division of the IRS
B)   Appeals and Collection Division of the IRS
C)   SB/SE Division of the IRS
D)   Criminal Investigation Division of the IRSE) A) and C)
F) All of the above

Question 14

A CPA can rely without verification on information given to the CPA by a taxpayer unless the information appears to be incorrect.

Accepted Answer

A) True 
 B)False

Question 15

Circular 230 includes rules on all of the following topics EXCEPT:

Accepted Answer

A)   who is authorized to practice before the IRS
B)   standards for "covered opinions"
C)   compliance with state ethical requirements
D)   a set of best practices to guide practitionersE) A) and D)
F) None of the above C

Question 16

Paid tax return preparers must register with the IRS and obtain a PTIN.

Accepted Answer

A) True 
 B)False

Question 17

Who can represent a taxpayer before the IRS Appeals Office under Circular 230?

Accepted Answer

A)   A CPA
B)   An officer of a corporation may represent the corporation
C)   An attorney
D)   All of the above
E)   Only a and cF) A) and B)
G) B) and C)

Question 18

The Statements on Standards for Tax Services (SSTS)  are issued by:

Accepted Answer

A)   the Internal Revenue Service
B)   the FASB
C)   the AICPA
D)   the American Bar Association
E)   the AICPA and the American Bar Association jointlyF) A) and B)
G) A) and C)

Question 19

Which of the following statements best describes Circular 230?

Accepted Answer

A)   Circular 230 has been adopted by the AICPA as its set of rules of practice for CPAs.
B)   Circular 230 is a set of Treasury Department ethical and legal standards for those engaging in practice before the IRS.
C)   Circular 230 is a set of internal rules at the IRS designed to protect tax practitioners from unfair discipline by the IRS.
D)   Circular 230 is a set of ethical rules for taxpayers.E) A) and C)
F) A) and D)

Question 20

Taxation and tax practice are comprised of the interaction of several disciplines. What are those disciplines? Briefly discuss their impact on the tax system.

Accepted Answer

Tax practice involves a blend of account...

Exam 1: Introduction to Tax Practice and Ethics

Tax avoidance and tax evasion are both illegal.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.

Correct AnswerverifiedShow Answer

A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer's estimates.

Correct AnswerverifiedShow Answer

What standard must tax practitioners meet under Section 6694 (preparer penalties) of the Internal Revenue Code with respect to undisclosed positions taken on tax returns?

Correct AnswerverifiedTax return positions which are not discl...View AnswerShow Answer

An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.

Correct AnswerverifiedShow Answer

Who may represent a taxpayer before the IRS in cases which go beyond the examination of the return?

Correct AnswerverifiedUnder Circular 230, the following indivi...View AnswerShow Answer

Tax practice can be defined as the application of the tax laws to specific accounting situations.

Correct AnswerverifiedTrue

The Statements on Standards for Tax Services are:

Correct AnswerverifiedC

Tax litigation is a process of:

Correct AnswerverifiedShow Answer

In a closed transaction, the scope of tax planning is:

Correct AnswerverifiedShow Answer

The primary change made by the Sarbanes-Oxley Act which affects the practice of public accounting is:

Correct AnswerverifiedShow Answer

Explain the AICPA guidelines under SSTS No. 3 for relying without verification on taxpayer or third party information when preparing a tax return.

Correct AnswerverifiedIn preparing or signing a return, an AIC...View AnswerShow Answer

An unenrolled tax return preparer can make an appearance as the taxpayer's representative only before the:

Correct AnswerverifiedShow Answer

A CPA can rely without verification on information given to the CPA by a taxpayer unless the information appears to be incorrect.

Correct AnswerverifiedShow Answer

Circular 230 includes rules on all of the following topics EXCEPT:

Correct AnswerverifiedC

Paid tax return preparers must register with the IRS and obtain a PTIN.

Correct AnswerverifiedShow Answer

Who can represent a taxpayer before the IRS Appeals Office under Circular 230?

Correct AnswerverifiedShow Answer

The Statements on Standards for Tax Services (SSTS) are issued by:

Correct AnswerverifiedShow Answer

Which of the following statements best describes Circular 230?

Correct AnswerverifiedShow Answer

Taxation and tax practice are comprised of the interaction of several disciplines. What are those disciplines? Briefly discuss their impact on the tax system.

Correct AnswerverifiedTax practice involves a blend of account...View AnswerShow Answer

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Tax return positions which are not discl...
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Under Circular 230, the following indivi...
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True

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C

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In preparing or signing a return, an AIC...
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C

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Tax practice involves a blend of account...
View Answer