Question 1

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Accepted Answer

The Taxpayer Bill of Rights (TBOR) includes all of the above statements. It directs taxpayers to other IRS publications with more details on specific taxpayer rights, explains the examination, appeal, collection, and refund process, and states that a taxpayer is responsible for payment of only the correct amount of tax due, no more, no less.

Question 2

Patricia has taxable income of $40,000 on which she pays income tax of $5,856. If Patricia's taxable income increases by $2,000, she will pay an additional tax of $500. What is Patricia's marginal tax rate?

Accepted Answer

The answer of Patricia has taxable income of $40,000 on...

Question 3

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).
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Accepted Answer

The answer of For each of the following situations, indicate...

Question 4

Linda filed her individual income tax return on its due date, but failed to pay $1,000 in taxes that were due with the return. Linda promptly paid the taxes upon receipt of a notice and demand for payment. If Linda pays the taxes exactly 5 months late, calculate the amount of her failure-to-pay penalty.

Accepted Answer

The answer of Linda filed her individual income tax return...

Question 5

List three things that a preparer needs to do in order to participate in the Annual Filing Season Program.

Accepted Answer

The answer of List three things that a preparer needs...

Question 6

For the following independent situations, list who (the IRS, the taxpayer, the party who initiates the case, or both sides) has the burden of proof in most civil tax cases:
a. The tax case involves a penalty.
b. The tax case involves a trust with net worth of $8.3 million.
c. The taxpayer has credible evidence, maintains records, and cooperates with reasonable IRS requests.
d. The IRS uses statistics to reconstruct an individual's income.

Accepted Answer

The answer of For the following independent situations, list who...

Question 7

What type of audit (office, field or correspondence) is demonstrated in the following examples?
a. An IRS agent views Microsoft's books and records at the Microsoft headquarters.
b. Susie receives a letter from the IRS asking her to provide documentation to support her charitable contributions on her tax return filed in the prior year.
c. Mr. and Mrs. John Doe are asked to bring their supporting documents to the downtown IRS office so that an IRS agent may review their tax return which was filed 2 years ago.

Accepted Answer

The answer of What type of audit (office, field or...

Question 8

Which of the following statements best describes the process of tax planning?

Accepted Answer

Tax planning involves strategically arranging one's finances in a way that minimizes the overall tax liability. It is legal, unlike tax evasion, and focuses on taking advantage of available deductions, credits, and exemptions to lower the amount of taxable income. Tax planning also involves taking steps to defer taxes on income, such as contributing to tax-deferred retirement accounts. In summary, tax planning is a legitimate process that aims to reduce tax liability while complying with tax laws.

Question 9

Answer the following:
a.​​Geoffrey filed his tax return 2 months and 8 days late and had not requested an extension of time for filing. Geoffrey's return indicated that he is to receive a $600 refund in taxes. Calculate the amount of Geoffrey's penalty for failure to file his tax return on time, assuming the failure to file was not fraudulent.
b.​​​​John filed his individual income tax return 3 1/2 months after it was due. He had not requested an extension of time for filing. Along with his return, John remitted a check for $1,000, which was the balance of the taxes he owed with his return. Disregarding interest, calculate the total penalty that John will be required to pay, assuming the failure to file was not fraudulent (and that he is not subject to failure-to-pay penalties).

Accepted Answer

The answer of Answer the following:
a.​​Geoffrey filed his tax return...

Question 10

Mark with a "Yes" if the following statement is true and is in Publication 1, The Taxpayer Bill of Rights. Mark with a "No" if the following statement is false or is not addressed in Publication 1.
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a. A phone number to call to have tax questions answered.
b. If a taxpayer is unable to provide or to verify information, then the IRS may contact a neighbor, bank, employer, or employees in order to obtain the information.
c. Only the taxpayer has the right to represent themselves in front of the IRS.
d. Publication 1 explains what to do if an IRS employee has not provided prompt, courteous, and professional assistance to the taxpayer.

Accepted Answer

The answer of Mark with a "Yes" if the following...

Question 11

Which of the following is not a preparer penalty?

Accepted Answer

Tax preparers are not penalized for failing to give the taxpayer the preparer's workpapers. The penalties typically relate to actions that directly affect the integrity of the tax filing process, such as failing to sign a return, not keeping a copy of the prepared return, or inappropriately handling a taxpayer's refund check.

Question 12

Janet did not file her tax return or pay her taxes for 2013 until November of 2014. She paid the following amounts to the IRS related to the late filing and payment of tax:
What amount of the above items may be deducted on Janet's 2014 individual income tax return? Explain.

Accepted Answer

The answer of Janet did not file her tax return...

Question 13

In the following independent situations, is it better to make an installment agreement with the IRS, an offer in compromise with the IRS, or ask for an extension of time to pay any taxes owed?
a. A taxpayer is unlikely to pay the tax amount they owe.
b. Using monthly payments, a taxpayer can afford to pay off the tax owed within 2 years.
c. A taxpayer can pay off their tax owed when they sell their boat which is up for sale.

Accepted Answer

The answer of In the following independent situations, is it...

Question 14

List three different ways that a tax return may be selected for an audit.

Accepted Answer

The answer of List three different ways that a tax...

Question 15

Indicate the date that the statute of limitations would run out on the following situations:
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a. The IRS assesses additional taxes for a 2012 tax return audit on May 5, 2014. How long does the IRS have to collect the tax?
b. On April 1, 2014, the IRS asks for and the taxpayer agrees to an additional year to complete an audit for a 2010 tax return which was filed on March 9, 2011.
c. Jeremy reported $10,000 of worthless debt on his 2013 tax return which he filed on August 3, 2014.
d. Jenny files her 2014 tax return on February 25, 2015.
e. James omits 7 percent of his income on his 2012 tax return which he filed on July 12, 2013.

Accepted Answer

The answer of Indicate the date that the statute of...

Question 16

The IRS determined that John underpaid his 2012 tax liability by $6,000 due to negligence. In 2014, John pays $1,000 of interest related to the underpayment and the full amount of any penalties assessed by the IRS.
a.Calculate the amount of the accuracy-related penalty that could be assessed by the IRS in this situation.
b.What part of the deficiency, income taxes, interest and penalty, is deductible by John on his current tax return? Explain.

Accepted Answer

The answer of The IRS determined that John underpaid his...

Question 17

Which of the following is the best definition of tax planning?

Accepted Answer

Tax planning is the process of analyzing a financial situation or plan from a tax perspective to ensure maximum tax efficiency and minimum tax liability. This includes strategies such as taking advantage of tax deductions, credits, and exemptions, as well as structuring financial transactions in a way that minimizes tax liability. Preparing a tax return is simply the documentation of the results of tax planning, while options C and D involve illegal or unethical conduct.

Question 18

Indicate in the blank space the date the statute of limitations would run out on each of the following individual tax returns.
a.​A 2014 tax return filed on April 15, 2015 which omitted $20,000 of income. The total gross income shown on the tax return was $40,000
b.A 2014 tax return filed April 15, 2015 which contained a large bad debt deduction
c.A 2000 tax return that was never filed
d.A 2014 tax return filed on April 15, 2015
e.A fraudulent 2014 tax return filed April 15, 2015

Accepted Answer

The answer of Indicate in the blank space the date...

Question 19

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

Accepted Answer

The Taxpayer Bill of Rights was created to inform taxpayers of their rights when dealing with the IRS, such as the right to confidentiality, the right to appeal decisions, and the right to quality service. It does not grant additional powers to the IRS or provide guidance on tax compliance.

Question 20

Stephanie has taxable income of $48,200 and a tax liability of $7,913. If Stephanie's income increases by $4,000, her tax liability will be $8,913.
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a. What is her average tax rate on the $48,200 of income?
b. What is her marginal tax rate?

Accepted Answer

The answer of Stephanie has taxable income of $48,200 and...

Quiz 12: Tax Administration and Tax Planning

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Patricia has taxable income of $40,000 on which she pays income tax of $5,856. If Patricia's taxable income increases by $2,000, she will pay an additional tax of $500. What is Patricia's marginal tax rate?

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).

List three things that a preparer needs to do in order to participate in the Annual Filing Season Program.

Which of the following statements best describes the process of tax planning?

Which of the following is not a preparer penalty?

Janet did not file her tax return or pay her taxes for 2013 until November of 2014. She paid the following amounts to the IRS related to the late filing and payment of tax: What amount of the above items may be deducted on Janet's 2014 individual income tax return? Explain.

List three different ways that a tax return may be selected for an audit.

Which of the following is the best definition of tax planning?

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

Stephanie has taxable income of $48,200 and a tax liability of $7,913. If Stephanie's income increases by $4,000, her tax liability will be $8,913. a. What is her average tax rate on the $48,200 of income? b. What is her marginal tax rate?

Quiz 12: Tax Administration and Tax Planning

Which of the following statements is the most correct regarding The Taxpayer Bill of Rights?

Patricia has taxable income of $40,000 on which she pays income tax of $5,856. If Patricia's taxable income increases by $2,000, she will pay an additional tax of $500. What is Patricia's marginal tax rate?

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties). ​

List three things that a preparer needs to do in order to participate in the Annual Filing Season Program.

Which of the following statements best describes the process of tax planning?

Which of the following is not a preparer penalty?

Janet did not file her tax return or pay her taxes for 2013 until November of 2014. She paid the following amounts to the IRS related to the late filing and payment of tax: What amount of the above items may be deducted on Janet's 2014 individual income tax return? Explain.

List three different ways that a tax return may be selected for an audit.

Which of the following is the best definition of tax planning?

Which of the following statements best describes the purpose of the Taxpayer Bill of Rights?

Stephanie has taxable income of $48,200 and a tax liability of $7,913. If Stephanie's income increases by $4,000, her tax liability will be $8,913. ​ a. What is her average tax rate on the $48,200 of income? b. What is her marginal tax rate?

For each of the following situations, indicate the nature and amount of the penalty that could be imposed. (The penalties include both tax practitioner penalties and taxpayer penalties).

Stephanie has taxable income of $48,200 and a tax liability of $7,913. If Stephanie's income increases by $4,000, her tax liability will be $8,913. a. What is her average tax rate on the $48,200 of income? b. What is her marginal tax rate?