FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 26: Tax Practice and Ethics

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Short Answer

Review LaterAdd Note

Review Later

During an audit,either the IRS or the taxpayer might request that the National Office issue a(n)____________________ memorandum concerning a disputed issue.

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Circular 230 allows a tax preparer to:

A) Take a position on a tax return that is contrary to a decision of the U.S.Supreme Court.
B) Charge a $5,000 fee to prepare a Form 1040EZ.
C) Advertise tax preparation services on the Internet.
D) Avoid signing a tax return that is likely to be audited.

E) B) and C)
F) A) and C)

Correct Answer

verified

Show Answer

Question 53

Essay

Review LaterAdd Note

The client has decided to dispute the Revenue Agent's Report.What is the tax advisor's next step?

Most practitioners encourage their clients to attend an IRS office audit.

Max (a calendar year taxpayer) donates a painting to a local art museum (a qualified charity) .The painting cost Max $2,000 ten years ago and,according to one of Max's friends (an amateur artist) ,is worth $50,000.On his income tax return,Max deducts $50,000 as a charitable contribution.Upon later audit by the IRS,it is determined that the true value of the painting was $30,000.Assuming that Max is subject to a 30% marginal income tax rate,his penalty for overvaluation is:

Only the government can appeal a decision of the Tax Court Small Cases Division.

Carol's AGI last year was $180,000.Her Federal income tax came to $60,000,which she paid through a combination of withholding and estimated payments.This year,her AGI will be $250,000,with a projected tax liability of $80,000,all to be paid through estimates.Ignore the annualized income method.Compute Carol's quarterly estimated payment schedule for this year.

The tax preparer penalty for taking an unreasonable tax return position is the greater of $1,000 or ____________________ of the tax professional's income from preparing the return.

When a practitioner discovers an error in a client's prior return,AICPA tax ethics rules require that an amended return immediately be filed.

A tax preparer and his/her client hold a privilege of confidentiality from the IRS,as to their discussions about completing a tax return.

The taxpayer can use a(n)____________________ to pay off a deficiency over a longer period of time.

Anthony,an individual calendar year taxpayer,incurred the following transactions. Assuming that any error in timely reporting these amounts was inadvertent,how much omission from gross income would be required before the six-year statute of limitations would apply?

A penalty for understating a tax liability can be waived if the taxpayer can show ____________________ for the position taken on the tax return.

The general statute of limitations extends for ____________________ years.It is ____________________ years if a substantial understatement of income is found,and ____________________ years with respect to worthless securities.

In preparing a tax return,a CPA should verify "to the penny" every item of information submitted by a client.

Kim underpaid her taxes by $30,000.Of this amount,$10,000 was due to negligence on her part,as her record-keeping system is highly inadequate.Determine the amount of any negligence penalty.

Arnold made a charitable contribution of property that he valued at $70,000.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.Arnold is in the 35% income tax bracket.Determine Arnold's amount due for both tax and any penalty.

If a taxpayer understates her cash sales by 30% of the adjusted gross income on the return,the statute of limitations on assessments is increased to six years.

Which of the following statements,if any,do not reflect the rules governing the accuracy-related penalty for negligence?

A negligence penalty is 20% of the underpayment attributable to negligence.