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Exam 17: Tax Practice and Ethics

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Question 41

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A CPA and his/her client hold a privilege of confidentiality from the IRS,as to their discussions about completing a tax return.

A) True
B) False

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Question 42

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In connection with the taxpayer penalty for substantial understatement of tax liability,what defenses (if any)are available?

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The defenses to the ...

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Question 43

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

The IRS employs about 100,000 personnel,making it one of the largest Federal agencies.

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.

The IRS can waive the penalty for understating a tax liability if the taxpayer shows ____________________ for the position taken on the tax return.

Juanita,who is subject to a 35% 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:

Chung's AGI last year was $180,000.Her Federal income tax came to $45,000,which she paid through a combination of withholding and estimated payments.This year,her AGI will be $250,000,with a projected tax liability of $60,000,all to be paid through estimates.Ignore the annualized income method.Compute Chung's quarterly estimated payment schedule for this year.

When a "prompt assessment" of the tax liability is requested,the taxpayer essentially is volunteering for an IRS audit of the tax return.

The Commissioner of the IRS is appointed by the:

Yang,a calendar year taxpayer,did not file a tax return for 2005 because she honestly believed that no additional tax was due.In 2012,Yang is audited by the IRS and the agent assesses a deficiency of $17,000 for 2005.Yang need not pay this deficiency,since the statute of limitations expired on April 15,2009.

Minnie,a calendar year taxpayer,filed a return correctly showing a zero Federal income tax liability for 2011,because her Form 1040 showed various deductions and credits.During 2012,Minnie's AGI is $120,000 and her tax liability is $20,000.To avoid a penalty for 2012,Minnie must make aggregate estimated tax payments of at least:

To file for a tax refund,an individual generally uses Form ____________________.

A(n)$____________________ penalty applies if the tax preparer does not sign the client's tax return. or

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

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."

According to the IRS,the annual "Tax Gap" totals about $______________________ billion. or

A tax preparer is in violation of Circular 230 if he or she:

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

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