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Exam 16: Tax Practice and Ethics

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Question 51

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Match each of the following penalties with the rate for that penalty as specified by the Code. a.$1,000 per violation b.$500 per violation c.$50 per violation d.1/2% per month e.5% per month f.15% per month g.5% of tax due h.15% of tax due i.20% of tax due j.75% of tax due -Improper refund claim

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Question 52

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The taxpayer can use a(n)_________________________ ____________________ without prior IRS permission to pay off a deficiency,if no more than $10,000 is due.

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Question 53

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The penalty for substantial understatement of tax liability does not apply if:

The Code's scope of privileged communications for a CPA extends only to ____________________ advice given.

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

Circular 230 requires that the tax practitioner use the "best practices" of the tax profession in carrying out a tax engagement. Specify what some of these best practices entail.

Kim underpaid her taxes by $30,000.Of this amount,$20,000 was due to negligence on her part,as her record-keeping system is highly inadequate.Determine the amount of any negligence penalty.

Over the last two decades,the Treasury has enforced numerous means by which to identify those taxpayers who use tax shelter devices,and to eliminate any resulting losses and deductions.Special reporting requirements apply to transactions that the IRS has labeled "tax shelters." Describe those requirements.

The IRS is a Federal agency,equal in rank to the Department of the Treasury.

Which of the following statements correctly reflects the rules governing interest on an individual's Federal tax deficiency and a claim for refund?

Match each of the following penalties with the rate for that penalty as specified by the Code. a.$1,000 per violation b.$500 per violation c.$50 per violation d.1/2% per month e.5% per month f.15% per month g.5% of tax due h.15% of tax due i.20% of tax due j.75% of tax due -Misstatement of withholding allowances

No overvaluation penalty is incurred by a C corporation until the misstatement would cause a tax underpayment of at least $10,000.

Several months prior to the due date of the return,Maria provides her accountant with all of the information necessary for the filing of the return.This was an extraordinarily busy tax season,and the accountant files the return late.Maria should not be subject to any penalties,because of the reasonable cause exception.

For each of the indicated penalties, indicate the appropriate taxpayer defense. a.Reasonable basis b.Reasonable cause c.Substantial authority d.Disclosure on return -Preparer penalty for taking an unreasonable position

A letter ruling is issued by the IRS at no charge.

The tax professional can render valuable services to the client in consultation over the strategy and tactics of dealing with a Federal tax audit.

How do rulings issued by the IRS benefit both the taxpayer and the IRS?

Last year,Ned's property tax deduction on his residence was $12,500.Although he lives in the same house,he tells his CPA that this year's taxes will be only $7,500.The CPA can use this estimate in computing Ned's itemized deductions,under the Statements of Standards for Tax Services.

After the completion of an audit,the taxpayer has ____________________ days to petition the Tax Court to rule in its favor.

The IRS targets high-income individuals for a higher audit rate than that of the general populace.