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Exam 26: Tax Practice and Ethics

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Question 21

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Because he undervalued property that he transferred by gift,Dan owes additional gift taxes of $4,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

A) True
B) False

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Question 22

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

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Question 23

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The tax professional can do more than just tax compliance work.He or she can work with the client in consultation over the strategy and tactics of dealing with a Federal tax audit.

The IRS national office is organized into operating divisions,broadly on the basis of the tax returns that are each division's responsibilities.List the four IRS operating divisions.

Circular 230 requires that a tax preparer provide training for the tax staff as to the latest changes in the tax law.

With respect to tax misconduct,a ____________________ penalty usually involves only a fine,and a ____________________ penalty also can include jail time.

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

A(n) ___________________ must obtain a Preparer Tax Identification Number (PTIN).

Under Circular 230,tax preparer Winston cannot disclose to a mortgage banker the income level of her client Pickett,or other information acquired by preparing the return,without Pickett's permission.

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. a.Taxpayer penalty b.Tax preparer penalty c.Appraiser's penalty -Negligence.

A(n) ___________________ member is required to follow the Statements of Standards for Tax Services in conducting a tax practice.

The tax ____________________ workpapers prepared as part of an independent financial audit are not privileged communications that can be kept confidential from an IRS subpoena.

​AICPA SSTS#1 requires that a client's tax return position:

The IRS can require that the taxpayer produce its financial accounting records,to determine if taxable income is computed correctly.

An IRS letter ruling might determine that an employee's compensation is unreasonable in amount.

Which of the following statements correctly reflects the rules governing interest to be paid on an individual's Federal tax deficiency or claim for refund?

Minnie,a calendar year taxpayer,filed a return correctly showing a zero Federal income tax liability for last year,because her Form 1040 showed various deductions and credits.For this tax year,Minnie's AGI is $120,000 and her tax liability is $20,000.To avoid a penalty for the current year,Minnie must make aggregate estimated tax payments of at least:

During an audit,IRS personnel might request a(n) ____________________ from the IRS National Office,to clarify the application of tax law concerning a tax deduction.

Match each of the following tax penalties with the type of tax penalty as specified by the Code. A letter can be used more than once. The correct solution may include more than one letter. a.Taxpayer penalty b.Tax preparer penalty c.Appraiser's penalty -Willful and reckless conduct.

Jake,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?