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

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Question 21

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For the following taxpayers indicate whether the taxpayer should file a tax return and why. a. Robert earned $50,000 this year as a staff accountant. His estimated tax liability is $4,500, and he expects to receive a $500 tax refund. b. Amy earned $4,000 this year working part-time. She will have no federal tax liability and has not made any federal tax payments. c. Ty earned $2,500 this summer and had $200 of federal taxes withheld from his paycheck. He will have no federal tax liability this year. d. Startup Corporation had a $50,000 loss this year. e. The Walker Family Trust earned $500 of income this year.

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(a) Because his gross income exceeds the...

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Question 22

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Lavonda discovered that the U.S. Circuit Court of Appeals for the Federal Circuit has recently issued a favorable opinion with respect to an issue that she is going to litigate with the IRS. Lavonda should choose which of the following trial courts to hear her case:

A) Tax Court only.
B) U.S. Court of Federal Claims only.
C) U.S. District Court only.
D) Tax Court or the U.S. District Court.
E) Tax Court or the U.S. Court of Federal Claims.

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

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Question 23

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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?

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

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Andy filed a fraudulent 2014 tax return on May 1, 2015. The statute of limitations for IRS assessment on Andy's 2014 tax return should end:

Which of the following is not considered a primary authority?

The IRS DIF system checks each tax return for mathematical mistakes.

Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:

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.

Which of the following has the highest authoritative weight?

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.

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.

Circular 230 was issued by:

Which of the following has the highest authoritative weight?

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 the U.S. Court of Federal Claims.

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

Which types of penalties are only imposed after normal due process including a trial?

Office examinations are the most common type of IRS audit.

Which of the following courts is the only court that provides for a jury trial?