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Exam 17: Tax Practice and Ethics

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Question 31

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Concerning the penalty for civil tax fraud:

A) Fraudulent behavior is more than mere negligence on the part of the taxpayer.
B) The burden of proof to establish the penalty is on the government.
C) The penalty is 100% of the underpayment.
D) Fraud is defined in Code §§ 6663(b) and (f) .

E) All of the above
F) B) and D)

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Question 32

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The chief executive of the IRS is the _________________________.

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Question 33

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Margaurite did not pay her Federal income tax on time.When she eventually filed the return,she reported a balance due.Compute Margaurite's failure to file penalty in each of the following cases.

The Statements on Standards for Tax Services are issued by the:

A ____________________% penalty may result when a taxpayer overstates by 150% or more the value of an asset contributed to a charity. or

For purposes of tax penalties,a VITA volunteer is not classified as a tax ____________________.

Ron,a calendar year taxpayer subject to a 35% marginal income tax rate,claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

The taxpayer can avoid a valuation penalty for overstating the value of the charitable contribution of an artwork by showing that the deduction claimed was based on a qualified ____________________.

When a tax dispute is resolved,interest is paid by or to the government.List three or more features of the interest computations that arise when a tax return is audited.

Leo underpaid his taxes by $250,000.Portions of the underpayment were attributable to negligence ($90,000)and to civil fraud ($160,000).Compute the total penalties incurred.

Quon filed his Federal income tax return on time,but he did not remit the full balance due.Compute Quon's failure to pay penalty in each of the following cases.The IRS has not yet issued a deficiency notice.

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

The special tax penalty imposed on appraisers:

The penalty for substantial understatement of tax liability does not apply if:

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

Faye,a CPA,is preparing Judith's tax return.Before computing Judith's deduction for business supplies,Faye must examine Judith's records in support of the deducted amount.

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

Megan prepared for compensation a Federal income tax return for Joan.Joan's return included an aggressive interpretation of the rules concerning overnight business travel.Megan is not liable for a preparer penalty for taking an unreasonable tax return position if:

The AICPA's Statements on Standards for Tax Services must be followed by its members;they are more than merely advisory.

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