Question 1

Debbie,a calendar year taxpayer,did not file a tax return for 2004 because she honestly believed that no additional tax was due.In 2010,Debbie is audited by the IRS and the agent assesses a deficiency of $7,000 for tax year 2004.Debbie need not pay this deficiency,since the statute of limitations expired on April 15,2008.

Accepted Answer

A) True 
 B)False

Question 2

Does the tax preparer enjoy an "attorney-client privilege" of confidentiality with his or her clients?

Accepted Answer

A limited confidentiality privilege is g...

Question 3

As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

Accepted Answer

A) True 
 B)False

Question 4

The IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction in a Tax Interpretation.

Accepted Answer

A) True 
 B)False

Question 5

With respect to the audit process,which statement is correct?

Accepted Answer

A)  Office audits are conducted at the office of the taxpayer.
B)  The most common type of Federal income tax audit is the correspondence audit.
C)  An office audit typically is used for a business taxpayer.
D)  A correspondence audit usually is concluded after a meeting with the taxpayer at the IRS auditor's office.E) B) and D)
F) B) and C)

Question 6

A tax preparer cannot disclose to a mortgage banker the client's income level,or other information acquired by preparing the return,without the client's permission.

Accepted Answer

A) True 
 B)False

Question 7

Ron,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $500,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Accepted Answer

A)  $10,000 (maximum penalty) .
B)  $24,500.
C)  $49,000.
D)  $122,500.E) B) and C)
F) A) and C)

Question 8

The IRS is one of the largest of all Federal agencies.

Accepted Answer

A) True 
 B)False

Question 9

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

Accepted Answer

A)  An estate is not required to make estimated payments.
B)  A trust must make estimated payments if its Federal income tax liability for the year will exceed $500.
C)  A C corporation must make estimated payments if its Federal income tax liability for the year will exceed $250.
D)  An individual must make estimated payments if his or her balance due for the Federal income tax for the year will exceed $1,000.E) None of the above
F) A) and D)

Question 10

The head of IRS operations is the Chief Counsel.

Accepted Answer

A) True 
 B)False

Question 11

Vera is audited by the IRS for several tax years.Her returns were prepared by the following parties.

Which of the following statements is correct?

Accepted Answer

A)  Sally may represent Vera for tax year 1.Such representation may extend through the Appeals Division of the IRS.
B)  Wesley may represent Vera for all tax years under audit.
C)  Alex can only represent Vera for tax year 3.
D)  Vera may represent herself for all tax years involved.E) None of the above
F) B) and C)

Question 12

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.

Accepted Answer

Tax advisors are to provide cl...

Question 13

Compute the undervaluation penalty for each of the following independent cases involving the executor's reporting of the value of a closely held business in the decedent's gross estate.In each case,assume a marginal estate tax rate of 45%.

Accepted Answer

The answer of Compute the undervaluation penalty for each of...

Question 14

Juanita,who is subject to a 45% marginal gift tax rate,made a gift of a sculpture to Bianca,valuing the property at $150,000.The IRS later valued the gift at $300,000.The applicable undervaluation penalty is:

Accepted Answer

A)  $27,000.
B)  $13,500.
C)  $10,000 (maximum penalty) .
D)  $0.E) A) and B)
F) A) and C)

Question 15

Circular 230 allows a tax preparer to:

Accepted Answer

A)  Take a position on a tax return that is contrary to a decision of the U.S.Supreme Court.
B)  Charge a $5,000 fee to prepare a Form 1040EZ.
C)  Advertise tax preparation services on the Internet.
D)  Avoid signing a tax return that is likely to be audited.E) A) and B)
F) A) and D)

Question 16

Mickey,a calendar year taxpayer,filed a return correctly showing no Federal income tax liability for 2009.During 2010,his AGI is $120,000 and his tax liability is $20,000.To avoid a penalty for 2010,Mickey must make aggregate estimated tax payments of at least:

Accepted Answer

A)  $0.
B)  $1,000 (minimum amount) .
C)  $18,000.
D)  $20,000.E) B) and D)
F) A) and C)

Question 17

A letter ruling can be used to establish the level of reasonable employee compensation.

Accepted Answer

A) True 
 B)False

Question 18

Circular 230 prohibits a tax preparer from charging a contingent fee for preparing an original Form 1040.

Accepted Answer

A) True 
 B)False

Question 19

The special tax penalty imposed on appraisers:

Accepted Answer

A)  Applies if the appraiser knew that the appraisal would be used in preparing a Federal income tax return.
B)  Does not apply if the appraiser did not know that the appraisal would be used in preparing a Federal income tax return.
C)  Equals 10% of the appraised value of the property.
D)  Can be as much as 200% of the appraisal fee that was charged.E) C) and D)
F) B) and C)

Question 20

Gloria,a calendar year taxpayer subject to a 35% marginal income tax rate,claimed a charitable contribution deduction of $800,000 for a sculpture that the IRS later valued at $100,000.The applicable overvaluation penalty is:

Accepted Answer

A)  $245,000.
B)  $98,000.
C)  $49,000.
D)  $10,000 (maximum penalty) .E) A) and B)
F) C) and D)

Exam 17: Tax Practice and Ethics

Does the tax preparer enjoy an "attorney-client privilege" of confidentiality with his or her clients?

Correct Answer
verified
A limited confidentiality privilege is g...
View Answer

A tax preparer cannot disclose to a mortgage banker the client's income level,or other information acquired by preparing the return,without the client's permission.

Correct Answer
verified

Vera is audited by the IRS for several tax years.Her returns were prepared by the following parties. Which of the following statements is correct?

Correct Answer
verified

The special tax penalty imposed on appraisers:

Correct Answer
verified

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.

Correct Answer
verified
Tax advisors are to provide cl...
View Answer

Gloria,a calendar year taxpayer subject to a 35% marginal income tax rate,claimed a charitable contribution deduction of $800,000 for a sculpture that the IRS later valued at $100,000.The applicable overvaluation penalty is:

Correct Answer
verified

Correct Answer
verified

The IRS is one of the largest of all Federal agencies.

Correct Answer
verified

The head of IRS operations is the Chief Counsel.

Correct Answer
verified

Ron,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $500,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Correct Answer
verified

With respect to the audit process,which statement is correct?

Correct Answer
verified

Circular 230 allows a tax preparer to:

Correct Answer
verified

Compute the undervaluation penalty for each of the following independent cases involving the executor's reporting of the value of a closely held business in the decedent's gross estate.In each case,assume a marginal estate tax rate of 45%.

Correct Answer
verified

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

Correct Answer
verified

Mickey,a calendar year taxpayer,filed a return correctly showing no Federal income tax liability for 2009.During 2010,his AGI is $120,000 and his tax liability is $20,000.To avoid a penalty for 2010,Mickey must make aggregate estimated tax payments of at least:

Correct Answer
verified

The IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction in a Tax Interpretation.

Correct Answer
verified

Juanita,who is subject to a 45% marginal gift tax rate,made a gift of a sculpture to Bianca,valuing the property at $150,000.The IRS later valued the gift at $300,000.The applicable undervaluation penalty is:

Correct Answer
verified

As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

Correct Answer
verified

Circular 230 prohibits a tax preparer from charging a contingent fee for preparing an original Form 1040.

Correct Answer
verified

A letter ruling can be used to establish the level of reasonable employee compensation.

Correct Answer
verified

Exam 17: Tax Practice and Ethics

Does the tax preparer enjoy an "attorney-client privilege" of confidentiality with his or her clients?

Correct AnswerverifiedA limited confidentiality privilege is g...View AnswerShow Answer

A tax preparer cannot disclose to a mortgage banker the client's income level,or other information acquired by preparing the return,without the client's permission.

Correct AnswerverifiedShow Answer

Vera is audited by the IRS for several tax years.Her returns were prepared by the following parties. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The special tax penalty imposed on appraisers:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedTax advisors are to provide cl...View AnswerShow Answer

Gloria,a calendar year taxpayer subject to a 35% marginal income tax rate,claimed a charitable contribution deduction of $800,000 for a sculpture that the IRS later valued at $100,000.The applicable overvaluation penalty is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The IRS is one of the largest of all Federal agencies.

Correct AnswerverifiedShow Answer

The head of IRS operations is the Chief Counsel.

Correct AnswerverifiedShow Answer

Ron,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $500,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Correct AnswerverifiedShow Answer

With respect to the audit process,which statement is correct?

Correct AnswerverifiedShow Answer

Circular 230 allows a tax preparer to:

Correct AnswerverifiedShow Answer

Compute the undervaluation penalty for each of the following independent cases involving the executor's reporting of the value of a closely held business in the decedent's gross estate.In each case,assume a marginal estate tax rate of 45%.

Correct AnswerverifiedShow Answer

Concerning a taxpayer's requirement to make quarterly estimated tax payments:

Correct AnswerverifiedShow Answer

Mickey,a calendar year taxpayer,filed a return correctly showing no Federal income tax liability for 2009.During 2010,his AGI is $120,000 and his tax liability is $20,000.To avoid a penalty for 2010,Mickey must make aggregate estimated tax payments of at least:

Correct AnswerverifiedShow Answer

The IRS responds to a taxpayer request concerning the tax treatment of a proposed transaction in a Tax Interpretation.

Correct AnswerverifiedShow Answer

Juanita,who is subject to a 45% marginal gift tax rate,made a gift of a sculpture to Bianca,valuing the property at $150,000.The IRS later valued the gift at $300,000.The applicable undervaluation penalty is:

Correct AnswerverifiedShow Answer

As a result of undervaluing property transferred by gift,Dan owes additional gift taxes of $3,000.The penalty for undervaluation does not apply in this situation,because the tax understatement was too small.

Correct AnswerverifiedShow Answer

Circular 230 prohibits a tax preparer from charging a contingent fee for preparing an original Form 1040.

Correct AnswerverifiedShow Answer

A letter ruling can be used to establish the level of reasonable employee compensation.

Correct AnswerverifiedShow Answer

Correct Answer
verified
A limited confidentiality privilege is g...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Tax advisors are to provide cl...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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