Deck 17: Sources and Applications of Federal Tax Law

Question 1

It is not possible for the Appellate Court to affirm the decision of a lower court on one particular issue and reverse it on another.

Answer 1

False

Question 2

The IRS announces its acquiescence or nonacquiescence to the memorandum decisions of the Tax Court.

Answer 2

False

Question 3

Once a tax law is enacted by Congress, any official interpretations of the law are by subsequent court decisions.

Answer 3

False

Question 4

Since the enactment of the Tax Equity and Fiscal Responsibility Act, taxpayers are subject to a penalty if there is a substantial underestimate of tax attributable to a particular treatment for which they have no substantial authority, unless the treatment is disclosed on the tax return.

Question 5

For a tax researcher, the weight accorded a particular court decision often may be determined by the reliance placed on that decision by other courts.

Question 6

A major difference between primary authorities and secondary authorities is that secondary sources are merely unofficial interpretations of tax law and have no legal authority.

Question 7

A Writ of Certiorari is the means by which the United States Court of Appeals grants review to a decision of the Tax Court.

Question 8

In the following citation, Eugene Coloman, 33 TCM 411, T.C.Memo 1974-78, aff'd.in 76-2 USTC ¶9581, 38 AFTR2d 76-5523, 540 F.2d 427 (CA-9, 1976), the researcher would know that the original decision in the trial court was made by the Tax Court in a memorandum decision and that the case on appeal was affirmed by the Ninth Circuit, U.S.Court of Appeals.

Question 9

Under the Golsen rule, the Tax Court follows the decisions of the Circuit Court to which a particular case would be appealed.

Question 10

A letter ruling, or private ruling, is an individual response to a taxpayer, and it is generally understood to apply to all taxpayers.

Question 11

Both revenue rulings and revenue procedures are first published in the Internal Revenue Bulletin and then eventually published in the Cumulative Bulletin.

Question 12

A tax service has limited value because it only summarizes court decisions on a particular point of tax law.

Question 13

The primary purpose of the Code of Federal Regulations is to answer questions from taxpayers concerning specific tax problems.

Question 14

Although temporary regulations have the same binding effect as final regulations, proposed regulations have no force or effect.

Question 15

Unlike interpretative regulations, legislative regulations are not controlling on a court.Thus, the courts will not hesitate to substitute their own judgment for that of the Treasury Department.

Question 16

The Internal Revenue Service may exercise discretion in determining whether to issue a letter ruling to a particular taxpayer.

Question 17

The House Ways and Means Committee holds hearings on proposed revenue bills initiated by the Senate.

Question 18

An appeal of an adverse decision by the Tax Court may be taken as a matter of right to the appropriate U.S.Court of Appeals.

Question 19

The three trial courts where tax matters may be litigated-the U.S.District Court, the U.S.Court of Federal Claims, and the U.S.Tax Court-are all courts of original jurisdiction.

Question 20

In the Small Claims Section of the U.S.Tax Court, the taxpayer forgoes the right to appeal the decision if she or he loses.

Question 21

In general, the Supreme Court only hears tax cases when one or more of certain conditions apply.These conditions exclude which of the following?

A)The Courts of Appeals are in conflict on an issue.
B)A decision of a Court of Appeals is in apparent conflict with a decision of the Supreme Court.
C)The Supreme Court has already decided an issue but feels that the issue should be looked at again, possibly to reverse its previous decision.
D)The tax deficiency involved exceeds $100,000.
E)The Court of Appeals has not used accepted or usual methods of judicial procedure or has sanctioned an unusual method by the trial court.

Question 22

Which one of the following authorities is not correctly paired with a source where that authority might be found?

A)Revenue procedures may be found in the Cumulative Bulletin.
B)Legislative regulations may be found in the Code of Federal Regulations.
C)Revenue rulings may be found in the Internal Revenue Bulletin.
D)Revenue procedures may be found in the Internal Revenue Bulletin.
E)Letter rulings may be found in the Code of Federal Regulations.

Question 23

Temporary regulations are generally issued

A)Shortly after enactment of a major change in the tax law so that a taxpayer has guidance until final regulations are formulated.
B)To clarify existing regulations that are incomplete.
C)To deal with taxpayers living temporarily overseas who may be subject to tax treaties between the United States and foreign countries.
D)To define tax treatment for a general set of facts on which the Code is silent; they have the full force and effect of law until the Code addresses the issue.
E)To interpret the Code, but they do not have the same binding effect as final regulations.

Question 24

Which of the following administrative interpretations would be generally accorded the force and effect of law?

A)Technical advice memoranda
B)Interpretative regulations
C)Letter rulings
D)Procedural regulations
E)Legislative regulations

Question 25

Which of the statements below is not a characteristic of the Tax Court?

A)Appeal is taken to the U.S.Court of Appeals.
B)A jury trial is not available.
C)The Court accepts only tax cases.
D)Taxpayers must pay the alleged deficiency and then sue for a refund.
E)The Court has nationwide jurisdiction.

Question 26

For the most accurate indication of Congressional intent for the enactment of a particular tax bill, a researcher would most likely consult the

A)Report issued by the House Ways and Means Committee
B)Report issued by the Senate Finance Committee
C)Report issued by the Joint Conference Committee on Taxation
D)Records of debate on the bill
E)Regulations and rulings of the Internal Revenue Service

Question 27

A taxpayer may take a case into the District Court

A)Only in the district where he or she resides
B)Only if the disputed tax deficiency has not been paid
C)Only to appeal the decision of the Tax Court or U.S.Court of Federal Claims
D)Only if a Writ of Certiorari is granted
E)Only if the Tax Court or U.S.Court of Federal Claims declines to hear the case

Question 28

Taxpayers who are in doubt about the particular tax consequences of a contemplated transaction may ask the IRS for a ruling on the tax question involved.Which one of the following statements is not true?

A)The IRS may decline to issue a letter ruling.
B)Letter rulings apply only to the particular taxpayers with a particular set of facts asking for the ruling.
C)During the process of obtaining a ruling, the IRS may recommend changes in a proposed transaction to assist taxpayers in reaching the result they wish.
D)Letter rulings are available in digest form to allow other taxpayers to cite them as authority when they match the particular set of facts for which the letter ruling was issued.
E)None of the above; all are true.

Question 29

Which of the following statements is not a characteristic of the Internal Revenue Code?

A)The basis of Congressional authority for the Federal income tax is the Sixteenth Amendment to the U.S.Constitution.
B)Changes made in the tax law after 1986 are incorporated into the 1986 Code as amended.
C)Any change in the Internal Revenue Code generally starts in the House of Representatives.
D)When a tax advisor is citing a particular item within the Internal Revenue Code, citation of the section number alone is usually sufficient.
E)The reasons why Congress made a particular change or addition to the Internal Revenue Code are given within the Code itself.

Question 30

Before litigating a tax case in court, the taxpayer must

A)Have exhausted the required administrative remedies available within the IRS
B)Convince the judiciary branch that the IRS misinterpreted tax law or wrongly applied it to the taxpayer's case
C)Try to find a similar court decision from the past and present the case to that Court
D)Enter into agreement with the IRS to use the Court as arbiter
E)Not be guilty of fraud in the original or amended return at issue

Question 31

Letter ruling 201107048 was issued in which of the following months.

A)January 2011
B)February 2011
C)March 2011
D)April 2011
E)May 2011

Question 32

The difference between regulations and revenue rulings is that

A)Revenue rulings are not limited to a given set of facts and regulations are limited.
B)Revenue rulings are the direct law-making powers of Congress and regulations are not.
C)Rulings require approval by the Secretary of the Treasury; regulations do not.
D)Revenue rulings do not have the authority of regulations; regulations are a direct extension of the law-making powers of Congress.
E)Only regulations are official pronouncements of the National Office of the IRS.

Question 33

Which one of the following types of Regulations cannot be cited as authoritative?

A)Proposed regulations
B)Temporary regulations
C)Procedural regulations
D)Interpretative regulations
E)Legislative regulations

Question 34

Which of the following could be a reason for a taxpayer not taking his tax case to a federal court of appeals?

A)Too expensive
B)Failure to exhaust all the administrative remedies
C)No appealable decision from a trial court
D)All of the above

Question 35

Which one of the following is not true of the Supreme Court's appellate jurisdiction?

A)Most of the time the Supreme Court indicates that it will accept a case by granting a Writ of Certiorari.
B)The Supreme Court reviews many tax cases during the year because of their national importance.
C)The Supreme Court often accepts cases when two or more Courts of Appeals are in conflict over an issue.
D)The Supreme Court does not conduct another trial but reviews the record of the trial court to determine if that court correctly applied the law to the facts.
E)The Supreme Court may accept a case where a Court of Appeals has settled an important question of Federal law and the Supreme Court feels such a question should have another review.

Question 36

Although the Small Tax Division of the U.S.Tax Court allows a taxpayer to obtain a decision with little formality or expense, a disadvantage is that

A)The taxpayer loses the right to appeal the decision.
B)The case can be remanded to Tax Court.
C)Special judges outside their area of expertise may be ruling.
D)Priority on the trial calendars is not received.
E)Cases eligible to be tried by the Court are limited to tax at issue of $50,000 or less.

Question 37

The body or group that generally initiates revenue bills is

A)The IRS
B)The House of Representatives
C)The Senate
D)The Joint Conference Committee on Taxation
E)The Ways and Means Committee

Question 38

Which of the following is not a characteristic of U.S.District Courts?

A)A District Court is not a national court.
B)A taxpayer need not pay any alleged deficiency in order to bring an action against the IRS.
C)The District Court hears many kinds of cases, including but not limited to tax cases.
D)The District Court judges are appointed for life.
E)The taxpayer may obtain a jury trial; the jury decides matters of fact but not matters of law.

Question 39

Which one of the following authorities is not correctly paired with a reporter or case system where that authority might be found?

A)Regular decisions of the United States Tax Court may be found in the United States Tax Court Reports.
B)A tax decision of the Court of Federal Claims may be found in the U.S.Tax Cases.
C)A decision of the Small Tax Division of the Tax Court may be found in the United States Tax Court Reports.
D)A decision of the Supreme Court of the United States may be found in the Supreme Court Reports (U.S.).
E)A tax decision of the Court of Federal Claims may be found in the American Federal Tax Reports.

Question 40

Which of the following sources of authority would most likely contain a review of Congress's intentions with respect to a particular piece of tax legislation?

A)Internal Revenue Code
B)Report of the House Ways and Means Committee
C)Code of Federal Regulations
D)Revenue procedures
E)Technical advice memoranda

Question 41

Tax periodicals are an important source of information for the tax practitioner.Which of the following is not true about tax periodicals?

A)They may be cited as authority in disputes with the IRS during administrative review or appeal.
B)They may give insight into recent court interpretations of tax laws.
C)They may provide question and answer sections to ensure that the reader comprehends the concepts and ramifications of recent rulings.
D)They generally offer concise summaries of new tax laws.
E)They serve to convey new tax planning opportunities.

Question 42

Which one of the following is not a secondary source of tax authority?

A)The Accountant's Index, American Institute of Certified Public Accountants
B)Kulsrud, "The Alternative Minimum Tax: Its Operation and Effect after TEFRA," The Review of Taxation of Individuals, 7 (Summer, 1983)
C)Crane v.Comm., 47-1 USTC ¶9217, 35 AFTR 776, 331 U.S.1 (USSC, 1947)
D)Harris, "The Effect of the Installment Sales Revision Act of 1980 on Like-Kind Exchanges: Nonsimultaneous Exchanges Reviewed," Taxes-The Tax Magazine, (July, 1981)
E)The Tax Law Review

Question 43

Which one of the following is not a primary authority of tax law?

A)Code § 1245(b)(3)
B)Regulations § 1.47-3(f)(2)
C)May v.U.S., 81-1 USTC ¶9286, 47 AFTR2d 81-1124, 644 F.2d 578 (CA-6, 1981)
D)Bailey, "Using Voting Preferred Stock to Avoid CFC Status," The International Tax Journal 2 (January 1976) pp.101-13
E)Revenue Rul.80-219, 1980-2 C.B.18

Question 44

Which of the following is true of revenue rulings?

A)Although they represent the official policy of the IRS, courts may overrule them.
B)Lower courts are bound by them.
C)They are a subset of Treasury Regulations.
D)Once affirmed by an appellate court, they have the force of law.
E)All of the above are true.

Question 45

Which of the following is not true of the Supreme Court's appellate jurisdiction?

A)All cases reach the Supreme Court through the Court's granting a Writ of Certiorari.
B)The Supreme Court will not hold another trial but merely reviews the records of the lower courts.
C)Review by the Supreme Court is almost entirely discretionary.
D)For most taxpayers, the final review is at the Court of Appeals level because the Supreme Court does not hear many tax cases.
E)The Supreme Court's decision not to grant a Writ of Certiorari means that the decision of the lower court still stands.

Question 46

Which of the choices below is the publisher in this citation: Johnson v.Oregon, 86-1, USTC ¶322 (D.Ct.Cal., 1986).

A)Commerce Clearing House
B)Prentice Hall
C)West Publishing Co.
D)Research Institute of America
E)Senate Finance Committee

Question 47

When posed with a particularly complex tax question, a researcher with little previous experience with the issue would be best served at the outset by consulting

A)The Internal Revenue Code
B)The Treasury Regulations
C)The applicable legislative history
D)A "tax service" (e.g., CCH, RIA)

Question 48

Which one of the following is not a citation to a Tax Court decision?

A)Simon Shield v.U.S., 79-1 USTC ¶8431
B)Robert L.Lynch, 84 T.C._______, 29 (1984)
C)James Pretzfelder, T.C.Memo 1983-147
D)Timothy Kirby, 47 TCM 814
E)J.Simpson Dean, 35 T.C.1083 (1961)