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

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Question 31

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Mel recently received a 30-day letter from the IRS.Although his tax return being audited has several potential large issues (potential tax consequences of $70,000 − $80,000),the IRS agent auditing his return only identified one item that will require a modest adjustment of $10,000.Mel feels strongly that the $10,000 adjustment would not hold up in court and was surprised that the IRS agent did not identify some of the other potential larger issues.What are Mel's choices with respect to the 30-day letter and what factors should influence his decisions?

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The "30-day letter" instructs the taxpay...

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Question 32

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Which of the following is not considered a primary authority?

A) Tax Court case.
B) Treasury Regulation.
C) Revenue ruling.
D) Tax service.
E) None of the choices are correct.

F) C) and D)
G) A) and E)

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Question 33

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The Internal Revenue Code of 1986 is the name of the current income tax code of the United States of America.

Lavonda discovered that the 5^th Circuit (where Lavonda resides) 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:

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

Which of the following committees typically initiates tax legislation?

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S.Senate.

Bill filed his 2019 tax return on March 15^th,2020.The statute of limitations for IRS assessment on Bill's 2019 tax return should end:

Which of the following is a false statement? A taxpayer filing a fraudulent tax return:

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:

A taxpayer can avoid a substantial understatement of tax penalty:

Joel reported a high amount of charitable contributions as a deduction on his individual tax return relative to taxpayers with similar income levels.The information matching program is the IRS program most likely to identify Joel's tax return for audit.

Closed facts are especially conducive to tax planning.

In general,a CPA will satisfy his professional responsibilities under the Statements on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

For which of the following tax violations is a civil penalty not imposed on taxpayers?

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

Generally,code sections are arranged (grouped together) :

Greg earned $25,500 this year and had $1,500 of federal income taxes withheld from his salary.Assuming that Greg is single,25 years old,and will have a total tax liability of $1,402 (and thus will receive a $98 refund) ,he:

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.

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