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

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Question 1

Multiple Choice

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Ramon's tax return was randomly selected for audit. Which IRS program likely selectedRamon's return for audit?

A) DIF System.
B) Information matching.
C) Document perfection.
D) National Research Program.
E) None of the choices are correct.

F) A) and D)
G) C) and D)

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Question 2

True/False

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The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S.Senate.

A) True
B) False

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Question 3

True/False

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Secondary authorities are official sources of the tax law with a lesser "weight" than primary authorities.

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

Roddy was researching an issue and found a favorable Tax Court decision that addresses his issue.He also determined that there was a nonacquiescence for the case. Who issued thenonacquiescence? What is it? What does it mean and how would it affect Roddy's reliance on the court case?

Mary Ann is working on a pretty big research project. Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact, whereas others are likely to be questions of law. Explain the difference between the two types of questions and how this wouldinfluence her research.

Hong, an introductory tax student, is beginning his first research project. He has a completeunderstanding of the relevant facts for his project and has identified the initial research questions. He is now ready to begin using a tax service to identify relevant authorities. What are some suggestions for him on how to use tax services to identify relevant authorities?

For the 2017 tax returns, indicate when the statute of limitation expires and why. a. Simon filed his tax return on April 10, 2018.b. Billy and Barbara filed their tax returns late on December 1, 2018.c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2018 but did no report his illegal income on his tax return.d. Luther filed his tax return on July 17, 2018 but has accidentally underreported his taxable gross income by20%.

In general, a CPA will satisfy his professional responsibilities under the Statement on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.

If Lindley requests an extension to file her individual tax return, the latest she could pay her tax due without penalty is:

Which of the following has the highest authoritative weight?

Revenue rulings and revenue procedures are examples of primary authorities.

Which of the following is not a factor that determines whether a taxpayer is required to file a tax return?

Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income. If Tyrone's tax return is chosen for audit because of his large charitable contributions, which audit program likely identified Tyrone's tax return for audit?

Closed facts are especially conducive to tax planning.

Campbell was researching a tax issue and found a favorable Tax Court opinion and an IRC Code Section that appears to answer the question. Is she finished with the research process? If so, why? If not, what must she do?

Greg earned $21,500 this year and had $1,500 of federal income taxes withheld from his salary. Assuming that Greg is single, 25 years old, and will have a total tax liability of$1,000 (and thus will receive a $500) refund, he:

If the President vetoes tax legislation, Congress:

Which of the following audits is the most common and typically less comprehensive?

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.