Question 1

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)   Avoid signing a tax return that is likely to be audited.
C)   Charge a $5,000 fee to prepare a Form 1040EZ.
D)   Operate the "Tax Nerd's Blog" on the Internet.E) B) and C)
F) A) and D)

Question 2

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

Accepted Answer

A)   Have a realistic possibility of being sustained if challenged by the Treasury or in the courts.
B)   Be supported by substantial authority.
C)   Agree with all pertinent IRS interpretations of the tax law.
D)   Follow all interpretations of the tax law that were reflected on the immediately prior tax year's return.E) A) and B)
F) C) and D)

Question 3

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 4

A privilege of_____________ exists between certain types of tax preparers and the client as to tax advice rendered.

Accepted Answer

The answer of A privilege of_____________ exists between certain types...

Question 5

The Commissioner of the IRS is appointed by the:

Accepted Answer

A)   Secretary of the Treasury Department.
B)   U. S. President.
C)   U. S. House of Representatives.
D)   U. S. Senate.
E)   SEC Commissioner.F) A) and B)
G) B) and D)

Question 6

Maria and Miguel Blanco are in the midst of negotiating a divorce. Because both parties are unwilling to share any current financial information, their joint Form 1040 for 2018 is not filed until October 31, 2019, when the respective divorce attorneys forced them to cooperate. The Blancos should not be subject to any Federal late-filing penalties, because the reasonable cause exception applies to their family discord.

Accepted Answer

A) True 
 B)False

Question 7

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.
-Failure to sign the return.

Accepted Answer

A)  Taxpayer penalty
B)  Tax preparer penalty
C)  Appraiser's penaltyD) A) and B)
E) A) and C)

Question 8

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

Accepted Answer

A)   Financial accounting tax accrual workpapers.
B)   A tax research memo used to support a tax planning idea.
C)   Building a defense against a penalty assessed for the use of a tax shelter.
D)   Building a defense against a charge brought by the SEC.E) A) and B)
F) A) and C)

Question 9

Describe the potential outcomes to a party who provides information to the IRS under the informant or whistleblower program.

Accepted Answer

An informant may qualify for a discretio...

Question 10

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?

Accepted Answer

A)   The IRS has full discretion in determining the rate that will apply.
B)   The simple interest method for calculating interest is used.
C)   IRS interest compounds daily.
D)   Congress sets the IRS interest rate twice each year.E) A) and B)
F) A) and C)

Question 11

Four Square Services Corporation estimates that its 2019 taxable income will be $1,000,000. Thus, it incurs a
$210,000 liability. For the following independent cases, compute Four Square's minimum quarterly estimated tax payments that will avoid an underpayment penalty.
a. For 2018, taxable income was $800,000, and tax liability was $168,000.
b. For 2017, taxable income was $2 million, and tax liability was $680,000. For 2018, taxable income was $100,000, and tax liability was $21,000.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> $52,500 25% × $210,000) is the basic pa...

Question 12

Lola, a calendar year taxpayer subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Redd, valuing the property at $70,000. The IRS later valued the gift at $100,000. The applicable undervaluation penalty is:

Accepted Answer

A)   $0.
B)   $1,000 minimum penalty) .
C)   $2,400.
D)   $12,000.E) A) and B)
F) B) and D)

Question 13

If the taxpayer shows______________ for an underpayment of tax, the failure to pay penalty can be reduced or eliminated.

Accepted Answer

The answer of If the taxpayer shows______________ for an underpayment...

Question 14

Loren Ltd., a calendar year taxpayer, had the following transactions, all of which were properly reported on a timely filed return. Presuming the absence of fraud, how much of an omission from gross income must occur for Loren before the six-year statute of limitations applies? Show your computations. $\begin{array}{ll}
\text { Gross receipts } && \$ 3,500,000 \
\text { Cost of sales } && (1,000,000) \text { Gross profit }\
&& \$ 2,500,000\
\text { Capital gain } & \$ 100,000 \
\text { Capital loss } & (30,000) &70,000\
\text { Total income } &&\$2,570,000
\end{array}$

Accepted Answer

A taxpayer must omit an amount of gross ...

Question 15

Gadsden, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Marvin, valuing the property at $150,000. The IRS later valued the gift at $400,000. The applicable undervaluation penalty is:

Accepted Answer

A)   $0.
B)   $20,000.
C)   $25,000 maximum penalty) .
D)   $40,000.E) C) and D)
F) B) and D)

Question 16

Faye, a CPA, is preparing Judith's tax return. Last year, Judith's return included dividend income from the P&G Company. This year, Judith reports no such income. Faye should inquire as to whether Judith sold the P&G stock during the year.

Accepted Answer

A) True 
 B)False

Question 17

The IRS is a subsidiary agency of the Department of the ________.

Accepted Answer

The answer of The IRS is a subsidiary agency of...

Question 18

The tax preparer penalty for taking an unreasonable tax return position is the greater of $___________
or ____________of the tax professional's income from preparing the return.

Accepted Answer

The answer of The tax preparer penalty for taking an...

Question 19

An individual might be incarcerated upon a conviction for:

Accepted Answer

A)   Using an improper appraisal to compute a tax deduction.
B)   Filing a tax refund claim that the Tax Court denies.
C)   Committing criminal tax fraud.
D)   Failure to pay to the Treasury one pay period's withholdings from employees.E) A) and D)
F) B) and D)

Question 20

The National Taxpayer Advocate reports to the:

Accepted Answer

A)   Treasury Secretary.
B)   IRS Commissioner.
C)   IRS Director of Compliance Analytics.
D)   IRS Director of Professional Responsibility.E) C) and D)
F) B) and D)

Exam 17: Tax Practice and Ethics

Describe the potential outcomes to a party who provides information to the IRS under the informant or whistleblower program.

Correct Answer
verified
An informant may qualify for a discretio...
View Answer

Gadsden, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Marvin, valuing the property at $150,000. The IRS later valued the gift at $400,000. The applicable undervaluation penalty is:

Correct Answer
verified

Correct Answer
verified
$52,500 25% × $210,000) is the basic pa...
View Answer

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?

Correct Answer
verified

An individual might be incarcerated upon a conviction for:

Correct Answer
verified

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

Correct Answer
verified

If the taxpayer shows______________ for an underpayment of tax, the failure to pay penalty can be reduced or eliminated.

Correct Answer
verified

Circular 230 allows a tax preparer to:

Correct Answer
verified

Lola, a calendar year taxpayer subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Redd, valuing the property at $70,000. The IRS later valued the gift at $100,000. The applicable undervaluation penalty is:

Correct Answer
verified

The National Taxpayer Advocate reports to the:

Correct Answer
verified

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

Correct Answer
verified

Faye, a CPA, is preparing Judith's tax return. Last year, Judith's return included dividend income from the P&G Company. This year, Judith reports no such income. Faye should inquire as to whether Judith sold the P&G stock during the year.

Correct Answer
verified

A privilege of_____________ exists between certain types of tax preparers and the client as to tax advice rendered.

Correct Answer
verified

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. -Failure to sign the return.

Correct Answer
verified

Correct Answer
verified
A taxpayer must omit an amount of gross ...
View Answer

The Commissioner of the IRS is appointed by the:

Correct Answer
verified

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

Correct Answer
verified

The tax preparer penalty for taking an unreasonable tax return position is the greater of $_ or __of the tax professional's income from preparing the return.

Correct Answer
verified

Correct Answer
verified

The IRS is a subsidiary agency of the Department of the ________.

Correct Answer
verified

Exam 17: Tax Practice and Ethics

Describe the potential outcomes to a party who provides information to the IRS under the informant or whistleblower program.

Correct AnswerverifiedAn informant may qualify for a discretio...View AnswerShow Answer

Gadsden, who is subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Marvin, valuing the property at $150,000. The IRS later valued the gift at $400,000. The applicable undervaluation penalty is:

Correct AnswerverifiedShow Answer

Correct Answerverified $52,500 25% × $210,000) is the basic pa...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

An individual might be incarcerated upon a conviction for:

Correct AnswerverifiedShow Answer

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

Correct AnswerverifiedShow Answer

If the taxpayer shows______________ for an underpayment of tax, the failure to pay penalty can be reduced or eliminated.

Correct AnswerverifiedShow Answer

Circular 230 allows a tax preparer to:

Correct AnswerverifiedShow Answer

Lola, a calendar year taxpayer subject to a 40% marginal Federal gift tax rate, made a gift of a sculpture to Redd, valuing the property at $70,000. The IRS later valued the gift at $100,000. The applicable undervaluation penalty is:

Correct AnswerverifiedShow Answer

The National Taxpayer Advocate reports to the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Faye, a CPA, is preparing Judith's tax return. Last year, Judith's return included dividend income from the P&G Company. This year, Judith reports no such income. Faye should inquire as to whether Judith sold the P&G stock during the year.

Correct AnswerverifiedShow Answer

A privilege of_____________ exists between certain types of tax preparers and the client as to tax advice rendered.

Correct AnswerverifiedShow Answer

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. -Failure to sign the return.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA taxpayer must omit an amount of gross ...View AnswerShow Answer

The Commissioner of the IRS is appointed by the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The tax preparer penalty for taking an unreasonable tax return position is the greater of $___________ or ____________of the tax professional's income from preparing the return.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The IRS is a subsidiary agency of the Department of the ________.

Correct AnswerverifiedShow Answer

Correct Answer
verified
An informant may qualify for a discretio...
View Answer

Correct Answer
verified

Correct Answer
verified
$52,500 25% × $210,000) is the basic pa...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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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
verified

Correct Answer
verified

Correct Answer
verified
A taxpayer must omit an amount of gross ...
View Answer

Correct Answer
verified

Correct Answer
verified

The tax preparer penalty for taking an unreasonable tax return position is the greater of $_ or __of the tax professional's income from preparing the return.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified