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

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Question 41

True/False

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An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

A) True
B) False

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Question 42

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

A) if the position is frivolous and disclosed on the tax return.
B) if the position has a realistic possibility of being sustained by the IRS or courts.
C) if there is substantial authority to support the position.
D) if the position has a reasonable basis and is not disclosed on the tax return.
E) None of the choices are correct.

F) B) and D)
G) B) and C)

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Question 43

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For the following taxpayers indicate whether the taxpayer should file a tax return and why. a.Robert earned $50,000 this year as a staff accountant.His estimated tax liability is $4,500, and he expects to receive a $500 tax refund. b.Amy earned $4,000 this year working part-time.She will have no federal tax liability and has not made any federal tax payments. c.Ty earned $2,500 this summer and had $200 of federal taxes withheld from his paycheck.He will have no federal tax liability this year. d.Startup Corporation had a $50,000 loss this year. e.The Walker Family Trust earned $500 of gross income this year.

If April 15^th falls on a Saturday, the due date for individual tax returns will be on Monday, April 17^th (assuming it is not a holiday).

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?

Rowanda could not settle her tax dispute with the IRS at the appeals conference.If she wants to litigate the issue but does not have sufficient funds to pay the proposed tax deficiency, Rowanda should litigate in the:

Which of the following has the highest authoritative weight?

Which of the following is not considered a primary authority?

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

Jeremy has a new client.He has identified a research question that relates to a transaction that the client completed several months ago.This type of research question will primarily involve:

Corporations are required to file a tax return only if their taxable income is greater than:

Caitlin is a tax manager for an accounting firm, and Duff is a first-year staff accountant.Describe the differences in the manner in which Caitlin and Duff may identify research issues and in general how one may identify research questions.

If Lindley requests an extension to file her individual tax return in a timely manner, the latest she could pay her tax due without penalty is:

Which of the following types of tax services is arranged by code section?

If the president vetoes tax legislation, Congress:

Allen filed his 2019 tax return on May 15^th, 2020, and underreported his gross income by 30 percent.Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2019 tax return should end:

Under the Statements on Standards for Tax Services, a CPA may recommend a tax return position if the position is frivolous and the position is not disclosed on the tax return.

Lavonda discovered that the U.S.Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS.Lavonda should choose which of the following trial courts to hear her case:

For the 2019 tax returns, indicate when the statute of limitations expires and why. a.Simon filed his tax return on April 10, 2020. b.Billy and Barbara filed their tax returns late on December 1, 2020. c.Pearson earns a living through various illegal activities.He filed his tax return on March 14, 2020, but did not report his illegal income on his tax return. d.Luther filed his tax return on July 17, 2020, but has accidentally underreported his gross income by 20 percent.

If a taxpayer has little cash and a very technical tax case about which 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.