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

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Question 1

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

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There are serious ramifications for comm...

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Question 2

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In a planning context,

A) closed facts are preferred to open facts.
B) new facts are preferred to old facts.
C) old facts are preferred to new facts.
D) open facts are preferred to closed facts.
E) None of the choices are correct.

F) C) and D)
G) A) and D)

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Question 3

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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?

Tyrone claimed a large amount of charitable contributions as a tax deduction relative to taxpayers with similar levels of income. If Tyrone's tax return is chosen for audit because of his large charitable contributions, which audit program likely identified Tyrone's tax return for audit?

If a taxpayer has little cash and a very technical tax case about which she feels very strongly that the tax rules are "on her side," she should prefer to have her case tried in the U.S. Tax Court.

The regulation with the lowest authoritative weight is the:

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:

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

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?

For the following taxpayers, please recommend the most advantageous trial-level court(s)to litigate a tax issue with the IRS. a. Joe is litigating a tax issue with the IRS that is considered a question of fact (i.e., the answers depend on the facts of the case). There is not a lot of authority on point for this case, but Joe has a very appealing story to justify his position that is likely to be viewed sympathetically by his peers. b. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is very favorable to the issue that Jesse plans to litigate with the IRS. c. The Circuit Court of Appeals for the Federal Circuit recently issued an opinion that is not favorable to the issue that Hank plans to litigate with the IRS. d. The 7 ^th Circuit (where Elizabeth resides)recently issued an opinion that is very favorable to the issue that Elizabeth plans to litigate with the IRS.

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

Campbell was researching a tax issue and found a favorable tax court opinion and an IRC Code Section that appear to answer the question. Is she finished with the research process? If so, why? If not, what must she do?

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.

Which of the following types of tax services is arranged by code section?

Which of the following is a false statement? A taxpayer filing a fraudulent tax return:

Mary Ann is working on a pretty big research project. Her manager has alerted her to the possibility that some of her research questions are likely to be questions of fact, whereas others are likely to be questions of law. Explain the difference between the two types of questions and how this would influence her research.

Which of the following is not considered a secondary authority?

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.

Caitlin is a tax manager for an accounting firm, and Duff is a first-year staff accountant. Describe the differences in the manner in which Caitlin and Duff may identify research issues and in general how one may identify research questions.

If Lindley requests an extension to file her individual tax return in a timely manner, the latest she could pay her tax due without penalty is: