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

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Question 51

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

A) True
B) False

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Question 52

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For the 2019 tax returns, indicate when the statute of limitations expires and why. a. Simon filed his tax return on April 10, 2020. b. Billy and Barbara filed their tax returns late on December 1, 2020. c. Pearson earns a living through various illegal activities. He filed his tax return on March 14, 2020, but did not report his illegal income on his tax return. d. Luther filed his tax return on July 17, 2020, but has accidentally underreported his gross income by 20 percent.

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(a)April 15, 2023. The statute of limita...

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Question 53

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

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

Kodak is a beginning tax researcher. He knows that the first step of the research process is to get an understanding of the facts surrounding the transaction being researched. Describe the two basic types of facts, the sources of facts for a research project, and any advice that may help Kodak.

For the following tax returns, identify which of the three audit types will most likely be utilized. a. The IRS selected Don's return for audit because of his high itemized deductions. The IRS would like documentation of these deductions. b. Large Public Corporation is a very large publicly traded corporation. It is involved in many complex transactions that have significant tax ramifications. c. George and Barbara operate a small business out of their home. The IRS has identified a couple of issues that may relate to their business. d. The IRS selected Bill and Hillary's tax return for review because of some of their investment sales. They would like a better understanding of the transactions and parties involved.

If an individual taxpayer is unable to file a tax return by its original due date, the taxpayer can request an automatic nine-month extension to file the return.

Lakeisha, a first-year staff accountant, was researching a tax issue and found what appears to be the answer to her question in her introductory tax textbook that she bought three years ago. She is thrilled because she thought it would take much longer to find her answer. What type of authority is the textbook? What are other examples of this type of authority? Can Lakeisha base her research conclusion on the textbook or similar authorities? Any suggestions for Lakeisha?

A tax practitioner can avoid IRS penalty relating to a tax return position:

A taxpayer can avoid an underpayment penalty if there is substantial authority that supports her tax return position.

Carey was researching a tax issue and located what appears to be a favorable IRS regulation. He knows that regulations serve different purposes and are issued in different forms. Which purpose and which form of regulation would provide Carey the most confidence that he has found an authority that carries a lot of weight for the long term? How could Carey check the status of this regulation?

Greg earned $25,500 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 $1,402 (and thus will receive a $98 refund) , he:

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

Which of the following is not considered a primary authority?

The statute of limitations for IRS assessment generally ends four years after the date a tax return is filed.

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

For fraudulent tax returns, the statute of limitations for IRS assessment is 10 years.

Generally, code sections are arranged (grouped together) :

For the 2019 tax returns, indicate when the statute of limitations expires and why. a. Phoenix filed his tax return on February 28, 2020. b. Jill and Randy filed their tax return on August 16, 2020. 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, 2020, but has accidentally underreported his taxable income by 30 percent.

Rebecca is at a loss. A new tax law was recently passed, and she needs to get a better understanding of why the tax law was passed and the intent of the law from an official authority. Describe what authorities may be especially helpful to Rebecca and why she can't find many authorities that discuss the new law.