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Exam 2: Tax Compliance,the Irs,and Tax Authorities

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Question 51

Multiple Choice

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A tax practitioner can avoid IRS penalty relating to a tax return position:

A) if the position is frivolous and disclosed on the tax return.
B) if the position has a realistic possibility of being sustained by the IRS or courts.
C) if there is substantial authority to support the position.
D) if the position has a reasonable basis and is not disclosed on the tax return.
E) None of the choices are correct.

F) All of the above
G) A) and B)

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Question 52

Multiple Choice

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Which of the following has the lowest authoritative weight?

A) Legislative regulation.
B) Private letter ruling.
C) Revenue ruling.
D) Interpretative regulation.
E) Revenue procedure.

F) B) and C)
G) A) and E)

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Question 53

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The "30-day" letter gives the taxpayer the opportunity to request an appeals conference or agree to a proposed IRS adjustment on the taxpayer's income tax return.

If Paula requests an extension to file her individual tax return in a timely manner,the latest she could file her return without a failure-to-file penalty is:

Caitlin is a tax manager for an accounting firm,and Duff is a first-year staff accountant.Describe the differences in the manner in which Caitlin and Duff may identify research issues and in general how one may identify research questions.

For the following taxpayers,please recommend the most advantageous trial - level court(s)to litigate a tax issue with the IRS. a.Joe is litigating a tax issue with the IRS that is considered a question of fact (i.e.,the answers depend on the facts of the case).There is not a lot of authority on point for this case,but Joe has a very appealing story to justify his position that is likely to be viewed sympathetically by his peers. b.The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is very favorable to the issue that Jesse plans to litigate with the IRS. c.The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is not favorable to the issue that Hank plans to litigate with the IRS. d.The 7^th Circuit (where Elizabeth resides)recently issued an opinion that is very favorable to the issue that Elizabeth plans to litigate with the IRS.

The IRS has recently completed its audit of Lorene's corporation.As a tax novice,she has very little understanding regarding the audit process and what happens next.Describe the post-audit process for Lorene and identify her options.

Andy filed a fraudulent 2019 tax return on May 1,2020.The statute of limitations for IRS assessment on Andy's 2019 tax return should end:

Carey was researching a tax issue and located what appears to be a favorable IRS regulation.He knows that regulations serve different purposes and are issued in different forms.Which purpose and which form of regulation would provide Carey the most confidence that he has found an authority that carries a lot of weight for the long term? How could Carey check the status of this regulation?

For the 2019 tax returns,indicate when the statute of limitations expires and why. a.Simon filed his tax return on April 10,2020. b.Billy and Barbara filed their tax returns late on December 1,2020. c.Pearson earns a living through various illegal activities.He filed his tax return on March 14,2020,but did not report his illegal income on his tax return. d.Luther filed his tax return on July 17,2020,but has accidentally underreported his gross income by 20 percent.

Which of the following is not a common tool used in conducting tax research?

Chris and Chuck were recently debating whether the Internal Revenue Code is "logical." Chris offers that she has briefly reviewed the Code and could hardly understand its organizational structure,if there is one.Please describe the basic organization of the Code and how understanding its organization may be especially beneficial to the tax researcher.

An acquiescence indicates that the IRS lost a court case and that it has decided to follow the court's ruling in the future.

Which of the following is not considered a secondary authority?

Temporary regulations have more authoritative weight than revenue rulings.

Which of the following is not a common method that the IRS uses to select returns for audit?

In researching a question of fact,the researcher should focus her efforts on identifying authorities with fact patterns similar to her client's facts.

Because the U.S.District Court hears a broader set of cases,decisions by the U.S.District Court may be considered to have more authoritative weight than those by the U.S.Court of Federal Claims.

If a taxpayer is due a refund,she does not have to file a tax return.

Dominic earned $1,500 this year,and his employer withheld $200 of federal income tax from his salary.Assuming that Dominic is single,30 years old,and will have zero tax liability this year,he: