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Exam 17: Tax Practice and Ethics

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Question 91

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Juarez a calendar year taxpayer) donates a painting to a local art museum a qualified charity) . The painting cost Juarez $2,000 10 years ago and, according to one of Juarez's friends an amateur artist) , now is worth $40,000. On his income tax return, Juarez deducts $40,000 as a Form 1040 charitable contribution. Upon later audit by the IRS, it is determined that the true value of the painting was $30,000. Assuming that Juarez is subject to a 24% marginal Federal income tax rate, his penalty for overvaluation is:

A) $10,000 minimum penalty) .
B) $5,000.
C) $2,400.
D) $2,000.
E) $0.

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

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Question 92

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An)_________ member must follow the Statements of Standards for Tax Services in conducting a tax practice.

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Question 93

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Currently, the IRS charges a_________ % interest rate on taxes that the taxpayer underpays.

Attorneys are allowed an attorney-client privilege of confidentiality with clients. Does a CPA tax preparer enjoy the same privilege? If so, on which types of tax and financial work?

A taxpayer's return might be selected for audit on the basis of the _________score that the IRS computes.

In a letter ruling, the IRS responds to a taxpayer's request concerning the tax treatment of a proposed transaction.

The IRS processes about_____ million individual tax returns every year, about______% of which are filed electronically.

Young-Eagle files her 2018 Form 1040 on July 1, 2019. The Federal tax statute of limitations for this return expires on:

Which statement is correct as to the conduct of IRS income tax audits?

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

LaCharles made a charitable contribution of property that he valued at $80,000. He deducted this amount as an itemized deduction on his tax return. The IRS can show that the actual value of the property is $50,000. LaCharles is in the 32% Federal income tax bracket. Determine the amount due for any penalty.

Quon filed an amended return claiming a $100,000 refund. The IRS disallowed the refund, and it can assess a penalty in the amount of_____________ % of the disallowed amount if there was no reasonable basis of support for the refund claim.

The taxpayer or a tax adviser may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return. Describe how these penalties work.

Maria's AGI last year was $95,000. To avoid a penalty, her estimated tax payments and withholdings for the current- year must equal the lesser of ____________________ % of prior-year taxes or ____________________ % of the current-year's taxes.