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Exam 26: Tax Practice and Ethics

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Question 81

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LaCharles made a charitable contribution of property that he valued at $80,000. He deducted this amount as an itemized deduction on his tax return. The IRS can show that the actual value of the property is $50,000. LaCharles is in the 32% Federal income tax bracket. Determine LaCharles's amount due for any penalty.

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The § 6662 penalty for an individual app...

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Question 82

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An individual's amended tax return, computing a refund or amount due, generally uses Form____________________.

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Question 83

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Gadsden, who is subject to a 40% marginal Federal 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:

Under Circular 230, Burke cannot complete a client's original Form 1040 and charge a fee equal to one-third of the resulting refund.

When a tax issue is taken to court, the burden of proof is on the IRS to show that its audit adjustments are correct.

A tax professional needs to know how the IRS is structured and how it works to carry out its mission. Evaluate this statement.

A taxpayer's return might be selected for audit on the basis of the ________________ score that the IRS computes.

Juarez (a calendar year taxpayer) donates a painting to a local art museum (a qualified charity) . The painting cost Juarez $2,000 ten years ago and, according to one of Juarez's friends (an amateur artist) , now is worth $40,000. On his income tax return, Juarez deducts $40,000 as a Form 1040 charitable contribution. Upon later audit by the IRS, it is determined that the true value of the painting was $30,000. Assuming that Juarez is subject to a 24% marginal Federal income tax rate, his penalty for overvaluation is:

Young-Eagle files her 2018 Form 1040 on July 1, 2019. The Federal tax statute of limitations for this return expires on:

A(n) ________________ member must follow the Statements of Standards for Tax Services in conducting a tax practice.

Megan prepared for compensation a Federal income tax return for Joan. Joan's return included an aggressive interpretation of the rules concerning overnight business travel. Megan is not liable for a preparer penalty for taking an unreasonable tax return position if:

The IRS is one of the largest Federal agencies, employing almost ________________ people throughout the year.

The tax preparer penalty for taking an unreasonable tax return position is the greater of $ ________________or ________________ of the tax professional's income from preparing the return.

When the taxpayer has not paid a tax assessment to the Treasury, the IRS unilaterally can:

Which of the following statements correctly reflects the rules governing interest to be paid on an individual's Federal tax deficiency or claim for refund?

A privilege of ________________ exists between certain types of tax preparers and the client as to tax advice rendered.

Under Circular 230, tax preparer Winston cannot disclose to a mortgage banker the income level of her client Pickett, or other information acquired by preparing the return, without Pickett's permission.

A(n) ________________ must obtain a Preparer Tax Identification Number (PTIN).

Comment on the AICPA's Statements on Standards for Tax Services. To whom do the standards apply? Are they binding or merely advisory?

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