Question 1

CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party.AICPA tax ethics rules require that an amended return immediately be filed,as political expenditures are not deductible.

Accepted Answer

A) True 
 B)False

Question 2

A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a ____________________ for the taxpayer's position.

Accepted Answer

The answer of A negligence penalty can be waived if...

Question 3

​Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

Accepted Answer

A)  ​100 percent.
B)  ​More than 85 percent.
C)  ​About 50 percent.
D)  ​Less than 20 percent.E) None of the above
F) B) and D)

Question 4

​Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Accepted Answer

A)  ​Negligence.
B)  ​Underpayment of estimated taxes
C)  ​Civil tax fraud.
D)  ​Criminal tax fraud.E) A) and C)
F) A) and D)

Question 5

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Accepted Answer

A) True 
 B)False

Question 6

A taxpayer's return might be selected for audit on the basis of the ____________________ score that the IRS computes.

Accepted Answer

The answer of A taxpayer's return might be selected for...

Question 7

Which of the following is subject to tax return preparer penalties?

Accepted Answer

A)  Meredith is the director of Federal taxes for a C corporation.
B)  Sammy is a volunteer who prepares returns at the retirement home under the IRS Tax Counseling for the Elderly program.
C)  Abbie prepares her mother's tax returns for $50 a year. A CPA, Abbie would charge a client $750 for completing a similar return.
D)  Lizzie, the firm's administrative assistant, makes copies of returns and assembles the mailings that the client must make to the taxing agencies.E) A) and D)
F) A) and C)

Question 8

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Accepted Answer

The answer of The Treasury document regulating the professional conduct...

Question 9

During an audit,the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data.

Accepted Answer

The answer of During an audit,the IRS might require that...

Question 10

When a tax issue is taken to court,the burden of proof is on the IRS to show that its audit adjustments are correct.

Accepted Answer

A) True 
 B)False

Question 11

An IRS "office audit" takes place at the headquarters office of the corporate taxpayer.

Accepted Answer

A) True 
 B)False

Question 12

The Statements on Standards for Tax Services apply to members of the AICPA,a state bar association,and all Enrolled Agents.

Accepted Answer

A) True 
 B)False

Question 13

The government can appeal a decision of the Tax Court Small Cases Division,but the taxpayer cannot.

Accepted Answer

A) True 
 B)False

Question 14

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

Accepted Answer

The answer of A ____________________% penalty may result when the...

Question 15

For each of the indicated tax penalties, indicate the appropriate taxpayer defense. A letter may be used more than once. Not all of the letters need be used.
a.Ignorance of the tax law
b.Reasonable basis
c.Reasonable cause
d.Complexity of the tax law
e.Substantial authority
f.Disclosure on return
-Negligence in filing a return.

Accepted Answer

The answer of For each of the indicated tax penalties,...

Question 16

The IRS is one of the largest Federal agencies,employing almost ____________________ people throughout the year.

Accepted Answer

The answer of The IRS is one of the largest...

Question 17

Which statement does not correctly describe the IRS letter ruling process?

Accepted Answer

A)  Letter rulings can benefit both taxpayers and the IRS.
B)  Letter rulings are issued by the Secretary of the Treasury Department.
C)  Letter rulings can be seen only by the taxpayer who requested the ruling; they are also known as "private letter rulings."
D)  Some letter rulings are of such importance and general interest that they are later published (in anonymous form)  as Revenue Rulings.E) All of the above
F) C) and D)

Question 18

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

Accepted Answer

Carole might be reacting to the general ...

Question 19

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

Accepted Answer

A)  The penalty rate is 20%.
B)  The penalty applies whenever the taxpayer takes a return position that is contrary to a court decision.
C)  The penalty applies when the taxpayer does not keep records adequate to compute the tax correctly.
D)  The penalty is waived if the taxpayer uses Form 8275 to disclose a return position that is reasonable though contrary to the IRS position.E) A) and B)
F) A) and C)

Question 20

During any month in which both the failure-to-file and failure-to-pay penalties apply,both penalties must be paid in full.

Accepted Answer

A) True 
 B)False

Exam 26: Tax Practice and Ethics

CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party.AICPA tax ethics rules require that an amended return immediately be filed,as political expenditures are not deductible.

Correct Answer
verified

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

Correct Answer
verified
Carole might be reacting to the general ...
View Answer

The IRS is one of the largest Federal agencies,employing almost ____________________ people throughout the year.

Correct Answer
verified

The Statements on Standards for Tax Services apply to members of the AICPA,a state bar association,and all Enrolled Agents.

Correct Answer
verified

During an audit,the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data.

Correct Answer
verified

During any month in which both the failure-to-file and failure-to-pay penalties apply,both penalties must be paid in full.

Correct Answer
verified

An IRS "office audit" takes place at the headquarters office of the corporate taxpayer.

Correct Answer
verified

Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

Correct Answer
verified

The government can appeal a decision of the Tax Court Small Cases Division,but the taxpayer cannot.

Correct Answer
verified

A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a ____________________ for the taxpayer's position.

Correct Answer
verified

Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Correct Answer
verified

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

Correct Answer
verified

Which of the following is subject to tax return preparer penalties?

Correct Answer
verified

A taxpayer's return might be selected for audit on the basis of the ____________________ score that the IRS computes.

Correct Answer
verified

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

Correct Answer
verified

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Correct Answer
verified

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Correct Answer
verified

When a tax issue is taken to court,the burden of proof is on the IRS to show that its audit adjustments are correct.

Correct Answer
verified

Correct Answer
verified

Which statement does not correctly describe the IRS letter ruling process?

Correct Answer
verified

Exam 26: Tax Practice and Ethics

CPA Liam discovers that last year's Form 1120 for his client PollCo claimed a $100,000 advertising deduction for a gift to candidates of the Green Party.AICPA tax ethics rules require that an amended return immediately be filed,as political expenditures are not deductible.

Correct AnswerverifiedShow Answer

Carole,a CPA,feels that she cannot act as an aggressive advocate for tax clients in today's environment.What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

Correct AnswerverifiedCarole might be reacting to the general ...View AnswerShow Answer

The IRS is one of the largest Federal agencies,employing almost ____________________ people throughout the year.

Correct AnswerverifiedShow Answer

The Statements on Standards for Tax Services apply to members of the AICPA,a state bar association,and all Enrolled Agents.

Correct AnswerverifiedShow Answer

During an audit,the IRS might require that the taxpayer produce the ____________________ that underlie the tax return data.

Correct AnswerverifiedShow Answer

During any month in which both the failure-to-file and failure-to-pay penalties apply,both penalties must be paid in full.

Correct AnswerverifiedShow Answer

An IRS "office audit" takes place at the headquarters office of the corporate taxpayer.

Correct AnswerverifiedShow Answer

​Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

Correct AnswerverifiedShow Answer

The government can appeal a decision of the Tax Court Small Cases Division,but the taxpayer cannot.

Correct AnswerverifiedShow Answer

A negligence penalty can be waived if the taxpayer discloses a tax return position that is contrary to a judicial precedent and there is a ____________________ for the taxpayer's position.

Correct AnswerverifiedShow Answer

​Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Correct AnswerverifiedShow Answer

Which of the following statements does not reflect the rules governing the accuracy-related penalty for negligence?

Correct AnswerverifiedShow Answer

Which of the following is subject to tax return preparer penalties?

Correct AnswerverifiedShow Answer

A taxpayer's return might be selected for audit on the basis of the ____________________ score that the IRS computes.

Correct AnswerverifiedShow Answer

A ____________________% penalty may result when the value of an asset contributed to a charity is reported at an amount that exceeds 150% of the correct valuation.

Correct AnswerverifiedShow Answer

The Treasury document regulating the professional conduct of tax return preparers is the Regulation known as _________________________.

Correct AnswerverifiedShow Answer

When the IRS issues a notice of tax due,the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Correct AnswerverifiedShow Answer

When a tax issue is taken to court,the burden of proof is on the IRS to show that its audit adjustments are correct.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which statement does not correctly describe the IRS letter ruling process?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Carole might be reacting to the general ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Mehta's Form 1040 is under an IRS audit.The chances that the auditor will propose a change in Mehta's income tax liability is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Keshawn can state "the tax law confused me" to avoid a tax penalty for:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified