Question 1

When the IRS issues a notice of tax due, the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Accepted Answer

A) True 
 B)False

Question 2

Yin-Li is the preparer of the Form 1120 for Cloves Corporation.On the return, Cloves claimed a deduction that the IRS later disallowed on audit.Compute the tax preparer penalty that could be assessed against Yin-Li in each of the following independent situations.

Accepted Answer

The potential § 6694 penalty does not de...

Question 3

The general statute of limitations regarding Federal tax returns extends for ____________________ years.It is ____________________ years if a substantial understatement of income is found, and ____________________ years with respect to worthless securities.
or

Accepted Answer

3, 6, 7 th...

Question 4

The penalty for substantial understatement of tax liability does not apply if:

Accepted Answer

A)  The taxpayer has substantial authority for the treatment taken on the tax return.
B)  The relevant facts affecting the treatment are adequately disclosed in the return or on Form 8275.
C)  The IRS failed to meet its burden of proof in showing the taxpayer's error.
D)  All of the above statements are correct.E) None of the above
F) A) and B)

Question 5

A tax preparer can incur a penalty if the client's return includes an unreasonable or ___________________ tax return position that understates the tax liability.

Accepted Answer

The answer of A tax preparer can incur a penalty...

Question 6

A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to apply with the tax law.

Accepted Answer

A) True 
 B)False

Question 7

Ron, a calendar year taxpayer subject to a 35% marginal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Accepted Answer

A)  $0.
B)  $7,000.
C)  $10,000 (maximum penalty) .
D)  $14,000.E) B) and C)
F) A) and D)

Exam 26: Tax Practice and Ethics

Ron, a calendar year taxpayer subject to a 35% marginal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Correct Answer
verified

Yin-Li is the preparer of the Form 1120 for Cloves Corporation.On the return, Cloves claimed a deduction that the IRS later disallowed on audit.Compute the tax preparer penalty that could be assessed against Yin-Li in each of the following independent situations.

Correct Answer
verified
The potential § 6694 penalty does not de...
View Answer

When the IRS issues a notice of tax due, the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Correct Answer
verified

The penalty for substantial understatement of tax liability does not apply if:

Correct Answer
verified

A tax preparer can incur a penalty if the client's return includes an unreasonable or ___________________ tax return position that understates the tax liability.

Correct Answer
verified

The general statute of limitations regarding Federal tax returns extends for years.It is years if a substantial understatement of income is found, and years with respect to worthless securities. or

Correct Answer
verified
3, 6, 7 th...
View Answer

A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to apply with the tax law.

Correct Answer
verified

Exam 26: Tax Practice and Ethics

Ron, a calendar year taxpayer subject to a 35% marginal income tax rate, claimed a Form 1040 charitable contribution deduction of $250,000 for a sculpture that the IRS later valued at $150,000.The applicable overvaluation penalty is:

Correct AnswerverifiedShow Answer

Yin-Li is the preparer of the Form 1120 for Cloves Corporation.On the return, Cloves claimed a deduction that the IRS later disallowed on audit.Compute the tax preparer penalty that could be assessed against Yin-Li in each of the following independent situations.

Correct AnswerverifiedThe potential § 6694 penalty does not de...View AnswerShow Answer

When the IRS issues a notice of tax due, the taxpayer has 90 days to either pay the tax or file a petition with the Tax Court.This is conveyed in the "ninety-day letter."

Correct AnswerverifiedShow Answer

The penalty for substantial understatement of tax liability does not apply if:

Correct AnswerverifiedShow Answer

A tax preparer can incur a penalty if the client's return includes an unreasonable or ___________________ tax return position that understates the tax liability.

Correct AnswerverifiedShow Answer

The general statute of limitations regarding Federal tax returns extends for ____________________ years.It is ____________________ years if a substantial understatement of income is found, and ____________________ years with respect to worthless securities. or

Correct Answerverified3, 6, 7 th...View AnswerShow Answer

A negligence penalty is assessed when the taxpayer is found to have not made a reasonable attempt to apply with the tax law.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The potential § 6694 penalty does not de...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The general statute of limitations regarding Federal tax returns extends for years.It is years if a substantial understatement of income is found, and years with respect to worthless securities. or

Correct Answer
verified
3, 6, 7 th...
View Answer

Correct Answer
verified