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

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Question 41

True/False

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Corporations are required to file a tax return annually regardless of their taxable income.

A) True
B) False

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Question 42

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If a taxpayer is due a refund, she does not have to file a tax return.

A) True
B) False

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Question 43

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Raul was researching an issue and found two Tax Court decisions issued within 6 months of each other, one for a taxpayer residing in California and the other for a taxpayer residing in New York whose rulings were inconsistent. Raul knows that the federal tax law does not differ by state and the issue was exactly the same in both cases. Raul is confused because he thought that a basic judicial doctrine was that a court is supposed to rule consistently. Name and describe this judicial doctrine that requires judicial consistency and discuss why the Tax Court may have intentionally ruled inconsistently in this example.

Closed facts are especially conducive to tax planning.

Which of the following courts is the only court that provides for a jury trial?

Which of the following is not considered a secondary authority?

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

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

Allen filed his 2018 tax return on May 15ᵗʰ, 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:

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

Joel reported a high amount of charitable contributions as a deduction on his individual tax return relative to taxpayers with similar income levels. The information matching program is the IRS program most likely to identify Joel's tax return for audit.

Lavonda discovered that the 5ᵗʰ Circuit (where Lavonda resides) 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:

Chris and Chuck were recently debating whether the Internal Revenue Code is "logical." Chris offers that she has briefly reviewed the Code and could hardly understand its organizational structure, if there is one. Please describe the basic organization of the code and how understanding its organization may be especially beneficial to the tax researcher.

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

For which of the following tax violations is a civil penalty not imposed on taxpayers?

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 $1,430 (and thus will receive a $70) refund, he:

The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S. Senate.

Which of the following audits is the least common, broadest in scope, and typically most complex?

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%.