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Exam 26: Tax Practice and Ethics

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Question 21

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As part of a tax return engagement for XYZ Partnership,Enrolled Agent Wang can draft an amendment to the XYZ partnership agreement.

A) True
B) False

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Question 22

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Circular 230 applies to all tax practitioners.This includes attorneys,CPAs,and enrolled agents,even though each of the groups has its own code of conduct.

A) True
B) False

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Question 23

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In taking a dispute to the Appeals Division,a written protest is required of the taxpayer when the proposed deficiency exceeds $____________________.

A CPA can take a tax return position for a client that is contrary to current IRS interpretations of the law.

A(n)$____________________ penalty applies if the tax preparer does not sign the client's tax return. or

The taxpayer might secure a(n)____________________ to assure that a homeless shelter qualifies for tax exempt treatment.

A CPA,an attorney,and a(n)____________________ can represent taxpayers before the IRS.

Carrie'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 Carrie's quarterly estimated payment schedule for this year. Current-Year Method

Troy Center Ltd.withheld from its employees' paychecks $200,000 in Federal income and Social Security taxes for the Monday,June 30 payroll.It then spent the $200,000 on equipment upgrades,missing altogether the August 2 due date for the tax remittances.How much does Troy now owe the government in taxes and penalties? Ignore interest accruals,and assume that the Treasury can prove that Troy's redirecting of the tax withholdings was willful.

Jenny prepared Steve's income tax returns for no compensation for 2008 and 2009.Jenny is Steve's mother.In 2011,the IRS notifies Steve that it will audit his returns for 2007-2009.If Steve so desires,Jenny may represent him during the audit of all three returns.

With respect to the Small Cases Division of the Tax Court,

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

The IRS processes about ____________________ million individual tax returns every year.

Latrelle prepares the tax return for Whitehall Corporation.Latrelle includes a $5,000 deduction on the return.This type of deduction previously has been disallowed by the Tax Court,although there is a 15% chance that the holding will be reversed on an appeal.The return does not make any special disclosure that the deduction is being claimed.Whitehall paid Latrelle a fee of $3,000 for preparing the Form 1120.Latrelle will be assessed a preparer penalty of $1,000 for taking an unreasonable position on the Whitehall return.

In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

Clara underpaid her taxes by $50,000.Of this amount,$15,000 was due to negligence on her part,as her record-keeping system is highly inadequate.Determine the amount of any negligence penalty

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

Describe the following written determinations that are issued by the IRS.

Circular 230 requires that a tax preparer be aware of changes in the tax law.Furthermore,office practices of the preparer must be up to industry standards.

Congress has set very high goals as to the number of Forms 1040 that should be filed electronically.Summarize the benefits of e-filing,from the perspective of both the taxpayer and the government.