Deck 1: Understanding and Working With the Federal Tax Law

Question 1

Since interest and taxes are deductible by a homeowner, a person who rents an apartment may take an itemized deduction equal to 20% of rent payments.

Answer 1

False

Question 2

Taxpayers may look at Committee Reports to determine the intent of Congress.

Answer 2

True

Question 3

Although a corporation is subject to a Federal income tax, a partnership is not.

Answer 3

True

Question 4

Regulations are arranged in a different sequence than the Internal Revenue Code.

Question 5

A tax bill cannot originate in the Senate Finance Committee.

Question 6

Alabama and South Carolina are community property states.

Question 7

The Federal tax law allows a taxpayer to claim a deduction for state and local income taxes.

Question 8

Revenue-neutral tax laws reduce deficits.

Question 9

These Internal Revenue Code citations are incorrect: § 212(1) and § 1221(1).

Question 10

Internal Revenue Code § 6 involves gross income and § 7 outlines itemized deductions.

Question 11

Temporary Regulations have the same authoritative value as Final Regulations for 4 years.

Question 12

The United States Federal government has a provision in the Constitution which precludes deficit spending.

Question 13

One Code section enables shareholders in a small business corporation to obtain an ordinary deduction for any loss recognized on a stock investment.

Question 14

Longer class lives for depreciable property and the required use of straight-line method of depreciation would likely dampen the tax incentive for purchasing capital assets.

Question 15

Subchapter P refers to the subchapter in the Internal Revenue Code that deals with partners and partnerships.

Question 16

Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.

Question 17

The encouragement of private-sector pension plans can be justified under the encouragement of certain industries.

Question 18

Proposed Regulations have the force and effect of law.

Question 19

The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United States Code.

Question 20

The domestic production activities deduction is structured to create jobs.

Question 21

Unlike determination letters, letter rulings are issued by the National Office of the IRS.

Question 22

Which provision could best be justified as encouraging small business?

A) Ordinary loss allowed on § 1244 stock.
B) Percentage depletion.
C) Domestic production activities deduction.
D) Interest deduction on home mortgage.
E) None of the above.

Question 23

A U.S. District Court must abide by the precedents set by the U.S. Court of Appeals of its jurisdiction.

Question 24

A jury trial is available in a U.S. Court of Appeals situation.

Question 25

In a U.S. District Court, a jury can decide both questions of fact and questions of law.

Question 26

Which provision is not justified by social considerations?

A) Refundable earned income credit.
B) Adoption tax credit.
C) Like-kind exchange treatment.
D) Disallowance of illegal kickbacks.
E) None of the above.

Question 27

Treasury Decisions are issued by the Treasury Department to promulgate new Regulations.

Question 28

When there is a direct conflict between a Code section and a treaty provision, the most recent item takes precedence.

Question 29

Proposed Regulations are not published in the Federal Register.

Question 30

Regulations are issued by the Treasury Department.

Question 31

Revenue Procedures deal with the internal management practices and procedures of the IRS.

Question 32

A Revenue Ruling is a legislative source of Federal tax law.

Question 33

Which provision could best be justified as a means of controlling the economy?

A) Write-off of research and development expenditures.
B) The § 179 immediate write-off of depreciable capital expenditures.
C) Amortization of pollution control facilities.
D) The rehabilitation tax credit.
E) None of the above.

Question 34

Revenue Rulings carry the same legal force and effect as Regulations.

Question 35

Only one judge hears a trial in a U.S. District Court.

Question 36

A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S. District Court.

Question 37

Appeals from the U.S. Court of Federal Claims go to the U.S. Supreme Court.

Question 38

Determination letters usually involve proposed transactions.

Question 39

"Legislative regulations" are stronger than "interpretative" regulations.

Question 40

The Golsen rule has been overturned.

Question 41

Which citation refers to a Fourth Circuit Court of Appeals decision?

A) 40 T.C. 1018.
B) 2 TCM 205 (1951).
C) 354 F.Supp. 1003 (D. Ct. Ga, 1972).
D) 914 F.2d 396 (CA-3, 1990).
E) None of the above.

Question 42

Interpret the following citation: 64-1 USTC ¶ 9618, aff'd in 344 F. 2d 966.

A) A U.S. Tax Court Small Cases Division decision that was affirmed on appeal.
B) A U.S. Tax Court decision that was affirmed on appeal.
C) A U.S. District Court decision that was affirmed on appeal.
D) A U.S. Court of Appeals decision that was affirmed on appeal.
E) None of the above.

Question 43

Regarding Technical Advice Memoranda, which statement is incorrect?

A) Issued by the National Office of IRS.
B) Most often deal with a completed transaction.
C) May be cited and used as precedent.
D) Issued with multi-digit file numbers.
E) None are incorrect.

Question 44

Regulations may first be found in:

A) Federal Register.
B) Cumulative Bulletin.
C) Internal Revenue Bulletin.
D) I.R.S. Digest.
E) All of the above.

Question 45

Which of the following sources has the highest tax validity?

A) Treasury Regulation.
B) Revenue Procedure.
C) Internal Revenue Code.
D) Temporary Regulation.
E) All have the same weight.

Question 46

Revenue Procedures are published in the:

A) Congressional Record.
B) Federal Revenue Bulletin.
C) Internal Revenue Bulletin.
D) I.R.S. Digest.
E) None of the above.

Question 47

Which state is located in the jurisdiction of the Fifth Court of Appeals?

A) Louisiana.
B) California.
C) New York.
D) South Carolina.
E) None of the above.

Question 48

Which of these notations would appear after a U.S. Tax Court citation if the IRS disagrees with the decision?

A) Rev'd 935 F.2d 203 (1991).
B) Nonacq. 1979-1 C.B. 1.
C) Cert. den. 361 U.S. 875 (1959).
D) Acq. 1990-1 C.B. 2.
E) None of the above.

Question 49

Determine the incorrect citation:

A) TAM 20002704.
B) George W. Guill, 112 T.C.__, No. 22 (1999).
C) John H. Wong, T.C. Summary Opinion 2009-152.
D) Rev. Rul. 98-32, 1998-25 I.R.B. 4.
E) None of the above.

Question 50

In Forty-Four Cigar Co., 2 B.T.A. 1156, the 1156 stands for:

A) The volume number.
B) The year of the decision.
C) The paragraph number.
D) The page number.
E) None of the above.

Question 51

Which of the following refers to a trial court rather than an appellate court decision?

A) Forgeus v. Comm., 6 B.T.A. 291 (1927).
B) Farris v. Comm., 222 F.2d 320 (CA-10, 1955).
C) Danville Plywood Corp., 899 F.2d 3 (Fed Cir. 1990).
D) Boehm v. Comm., 326 U.S. 287 (1945).
E) None of the above.

Question 52

Which state is not a community property state?

A) Arizona.
B) Texas.
C) New Mexico
D) Virginia
E) None of the above.

Question 53

Which statement is not true about this citation: Bonkowski v. Comm., 29 TCM 1645 (1970), aff'd 458 F.2d 709 (CA-7, 1972), cert. den.?

A) The Supreme Court decided not to agree or disagree with the Seventh Court of Appeals.
B) The Seventh Court of Appeals disagreed with the Tax Court.
C) The Tax Court decision starts on page 1645.
D) The Seventh Court of Appeals decision appears in Vol. 458.
E) All of the above.

Question 54

Which citation refers to a Second Court of Appeals decision?

A) 40 T.C. 1018.
B) 159 F. 2d 848 (CA-2, 1947).
C) 354 F. Supp. 1003 (D. Ct. Ga, 1972).
D) 914 F. 2d 396 (CA-3, 1990).
E) None of the above.

Question 55

Which citation is considered to be a legislative citation?

A) Ltr. Rul. 199952058.
B) Ann. 94-5, 1994-2 I.R.B. 39.
C) Reg. § 1.1014-1(c)(1).
D) § 351.
E) None of the above.

Question 56

Federal tax legislation generally originates in what body?

A) Internal Revenue Service.
B) Senate Finance Committee.
C) House Ways and Means Committee.
D) House Taxation Committee.
E) None of the above.

Question 57

Douglas and Sue, related parties, are landlord and tenant as to certain business property. If the IRS questions the amount of rent Sue is paying to Douglas, this is an illustration of the:

A) Arm's length concept.
B) Continuity of interest concept.
C) Tax benefit rule.
D) Substance over form concept.
E) None of the above.

Question 58

A Technical Advice Memorandum is issued by:

A) Treasury Department.
B) National Office of the IRS.
C) Office of Chief Council.
D) Area Director.
E) None of the above.

Question 59

A decision in which of the following courts carries the lowest tax authority?

A) U.S. Court of Appeals for the Federal Circuit.
B) U.S. Court of Appeals for the Second Circuit.
C) U.S. District Court.
D) U.S. Supreme Court.
E) U.S. Court of Appeals Federal Circuit.

Question 60

Which of the following is an administrative source of tax law?

A) Rev. Rul. 2010-19.
B) Joint Conference Committee Report.
C) Section 12(a) of the Internal Revenue Code.
D) All of the above.
E) None of the above.

Question 61

Which is a primary source of tax law?

A) J.W. Yarbo v. Comm., 737 F. 2d 479 (CA-5, 1984).
B) Article by a Federal judge in Harvard Law Review.
C) Determination letter.
D) Letter ruling.
E) All of the above are primary sources.

Question 62

Explain the Golsen doctrine.

Question 63

Which citation refers to a U.S. Court of Federal Claims decision?

A) Apollo Computer, Inc. v. U.S., 95-1 USTC ¶ 50,015 (Fed. Cl., 1994).
B) Westreco, Inc., T.C. Memo. 1992-561 (1992).
C) Bausch & Lomb, Inc. v. Comm., 933 F. 2d 1084 (CA-2, 1991).
D) Portland Manufacturing Co. v. Comm., 35 AFTR 2d 1439 (CA-9, 1975).
E) None of the above.

Question 64

Which court decision is generally more authoritative?

A) A U.S. Tax Court decision.
B) A U.S. Court of Federal Claims decision.
C) A U.S. District Court decision.
D) A U.S. Court of Appeals decision.
E) A U.S. Tax Court Memorandum decision.

Question 65

A Memorandum decision of the U.S. Tax Court could be cited as:

A) T.C. Memo. 1990-650.
B) 68-1 USTC ¶ 9200.
C) 37 AFTR 2d 456.
D) All of the above.
E) None of the above.

Question 66

Which trial court normally has 16 judges?

A) U.S. Tax Court.
B) U.S. Court of Federal Claims.
C) U.S. Supreme Court.
D) U.S. Court of Appeals.
E) None of the above.

Question 67

Which trial court's jurisdiction depends on the geographical location of the taxpayer?

A) U.S. Tax Court.
B) U.S. District Court.
C) U.S. Court of Federal Claims.
D) Small Cases Division of the Tax Court.
E) None of the above.

Question 68

If these citations appeared after a trial court decision, which one means that the decision was viewed favorably?

A) Aff'd 633 F. 2d 512 (CA-7, 1980).
B) Rem'd 399 F. 2d 800 (CA-5, 1968).
C) Rev'd 914 F. 2d 396 (CA-3, 1990).
D) Rev'd 935 F. 2d 203 (CA-5, 1991).
E) None of the above.

Question 69

Which trial court decision is generally less authoritative?

A) U.S. District Court.
B) U.S. Tax Court.
C) U.S. Court of Federal Claims.
D) Small Cases Division of the Tax Court.
E) All of the above are the same.

Question 70

Which of the following statements about an acquiescence is correct?

A) An acquiescence is issued in the Federal Register.
B) Acquiescences are published only for certain regular decisions of the U.S. Tax Court.
C) An acquiescence is published in the Internal Revenue Bulletin.
D) The IRS does not issue acquiescences to adverse decisions that are not appealed.
E) All of the above are correct.

Question 71

What is the value of Actions on Decisions to a tax researcher?