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

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Question 51

True/False

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As required by the Constitution, all tax bills are supposed to originate in the House of Representatives.

A) True
B) False

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Question 52

Multiple Choice

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Which of the following is not considered a secondary authority?

A) Text book.
B) Private Letter Ruling.
C) Tax article.
D) Tax service.
E) None of the choices are correct.

F) A) and E)
G) A) and D)

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Question 53

Multiple Choice

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Which judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

Corporations are required to file a tax return only if their taxable income is greater than:

A client has recently learned of a proposed tax bill that would increase the tax rates on investment gains by 5 percent. The President does not support this increase. Please describe for your client the process by which new tax legislation is created and how the President's disapproval may influence the enactment of the bill.

The Internal Revenue Code of 1986 is the name of the current income tax code of the United States of America.

If a taxpayer loses a case at the Circuit Court level, he is granted an automatic appeal hearing with the Supreme Court.

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:

Generally, if April 15^th falls on a Saturday, individual tax returns will be due on:

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

Allen filed his 2018 tax return on May 15^th, 2019 and underreported his gross income by 30 percent. Assuming Allen's underreporting is not due to fraud, the statute of limitations for IRS assessment on Allen's 2018 tax return should end:

Nolene suspects that one of her new clients may be intentionally underreporting his taxable income. What are the potential ramifications to her client of this behavior? What are the consequences to Nolene if she assists the client in underreporting income? Any advice for Nolene?

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 the nonacquiescence? What is it? What does it mean and how would it affect Roddy's reliance on the court case?

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

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

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:

Bill filed his 2018 tax return on March 15^th, 2019. The statute of limitations for IRS assessment on Bill's 2018 tax return should end:

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 gross income this year.

If the President vetoes tax legislation, Congress:

For the 2018 tax returns, indicate when the statute of limitation expires and why. a. Phoenix filed his tax return on February 28, 2019. b. Jill and Randy filed their tax return on August 16, 2019. c. Although required to file, Catherine chose not to file a tax return this year because she was expecting a tax refund and could not pull together all the information needed to file the return. d. Jerry filed his tax return on May 22, 2019 but has accidentally underreported his gross income by 30%.