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Exam 16: Tax Practice and Ethics

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Question 1

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The accuracy-related penalties typically relate to ____________________ on the part of the taxpayer,or other understatements of tax.

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Question 2

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When a practitioner discovers an error in a client's prior return,AICPA tax ethics rules require that an amended return immediately be filed.

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Question 3

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The ____________________ ____________________,a presidential appointee,represents the IRS in all tax litigation.

Henrietta has hired Gracie,a CPA,to complete this year's Form 1040.Henrietta uses software to keep the books for her business.She tells Gracie that a $5,000 amount for business supplies is "close enough" to constitute the deduction.Gracie can use this estimate in completing the Form 1040.

The basic Treasury document regulating tax preparers is the Regulation known as ____________________ ____________________.

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

About ____________________% of all Forms 1040 are audited each year.

Compute the undervaluation penalty for each of the following independent cases involving the executor's reporting of the value of a closely held business in the decedent's gross estate.In each case,assume a marginal estate tax rate of 45%.

The privilege of confidentiality applies to a CPA tax preparer concerning the client's information relative to:

With respect to the audit process,which statement is correct?

Harold,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $18,000 for a sculpture that the IRS later valued at $10,000.The applicable overvaluation penalty is:

Compute the overvaluation penalty for each of the following independent cases involving the taxpayer's reporting of the fair market value of charitable contribution property.In each case,assume a marginal income tax rate of 30%.

In the context of civil fraud,the burden of proof is on the IRS to show by a "preponderance of the evidence" that the taxpayer had a specific intent to evade a tax.

Leroy,who is subject to a 40% marginal gift tax rate,made a gift of a sculpture to Marvin,valuing the property at $150,000.The IRS later valued the gift at $400,000.The applicable undervaluation penalty is:

A taxpayer should conduct a cost-benefit analysis before taking a tax dispute to court.

Recently,the overall Federal income tax audit rate for individual returns has been about 0.3%.

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

Which of the following statements,if any,do not reflect the rules governing the accuracy-related penalty for negligence?

During any month in which both the failure-to-file and failure-to-pay penalties apply,both penalties must be paid in full.

Ron,a calendar year taxpayer subject to a 35% marginal tax rate,claimed a charitable contribution deduction of $500,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is: