Question 1

In a planning context,

Accepted Answer

In planning, open facts (i.e. facts that provide new and diverse perspectives) are preferred to closed facts (i.e. facts that are restricted, biased, or based on limited information). This is because open facts help in fostering creativity, innovation, and better decision-making.

Question 2

Generally, code sections are arranged (grouped together):

Accepted Answer

Code sections are generally arranged or grouped together by topic. This improves the readability and maintainability of the code, as related pieces of code are located close to each other. Random arrangement or grouping can make the code difficult to understand and modify, while chronological or length-based grouping may not be effective in ensuring that related code is grouped together.

Question 3

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

Accepted Answer

Annotated tax service is arranged by code section, providing an in-depth analysis and interpretation of tax laws, court cases, and regulations. Topical tax services categorize tax information by topics such as deductions, credits, and exemptions. Legal tax services focus on court cases and legal interpretations of tax laws. Professional tax services provide information on tax planning, preparation, and compliance for individuals and businesses. Therefore, D is the correct choice.

Question 4

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

Accepted Answer

Stare decisis is a judicial doctrine that means a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction. This doctrine is based on the principle of legal precedent and ensures that there is consistency and predictability in the interpretation and application of the law.

Question 5

Which of the following has the lowest authoritative weight?

Accepted Answer

Private letter rulings are specific to an individual taxpayer and therefore have the lowest authoritative weight. The other options are all issued by the IRS and apply to a broader group of taxpayers, giving them more authoritative weight.

Question 6

The regulation with the lowest authoritative weight is the:

Accepted Answer

Proposed regulations are issued for public comment and are not considered authoritative until they are finalized and published in the Federal Register as final regulations. Therefore, proposed regulations have the lowest authoritative weight.

Question 7

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Accepted Answer

A tax treaty is an agreement between two countries that sets out how tax will be treated for individuals working in one or both countries. In Josephine's case, a tax treaty between her home country and France would be especially helpful in determining the tax consequences of her job in Paris, including issues such as income tax, social security contributions, and other taxes.

Question 8

Which of the following committees typically initiates tax legislation?

Accepted Answer

The House Ways and Means Committee is responsible for initiating tax legislation in the House of Representatives.

Question 9

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

Accepted Answer

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position if it complies with the standards imposed by the applicable tax authority. This means that the position must be consistent with the tax law and regulations of that particular authority. The "more likely than not" standard and "clear and convincing evidence" standard are higher standards of proof used in tax law, but they are not necessary in every situation. The option about a frivolous position is not a valid recommendation as it goes against ethical standards.

Question 10

If the President vetoes tax legislation, Congress:

Accepted Answer

According to the Constitution, Congress can override a presidential veto with a 2/3rd positive vote in both the House and Senate.

Question 11

Which of the following has the highest authoritative weight?

Accepted Answer

Legislative regulations are created by Congress and signed into law by the President, giving them the highest authoritative weight. Revenue procedures, revenue rulings, action on decision, and private letter rulings are all interpretations or guidance issued by the IRS and may have less weight than legislative regulations.

Question 12

Which of the following is not a source of a tax practitioner's professional responsibilities?

Accepted Answer

All of the choices listed are sources of a tax practitioner's professional responsibilities, therefore none of the choices are correct.

Question 13

Circular 230 was issued by:

Accepted Answer

Circular 230 was issued by the Internal Revenue Service (IRS) in order to establish rules and regulations for practice before the IRS by attorneys, CPAs and enrolled agents.

Question 14

Which of the following is not a common tool used in conducting tax research?

Accepted Answer

All of the choices listed are common tools used in conducting tax research, therefore none of them are incorrect.

Question 15

Jeremy has a new client. He has identified a research question that relates to a transaction that the client completed several months ago. This type of research question willprimarily involve:

Accepted Answer

The transaction was completed several months ago, indicating that the facts are already established and not subject to change, thus they are "closed facts."

Question 16

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

Accepted Answer

Jaime would prefer to have a tax court issue the favorable opinion as it would be directly related to her tax question. The other options, such as divorce court or district court, would not have jurisdiction over tax laws and their rulings would not be relevant to her tax question.

Question 17

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Accepted Answer

Committee reports are prepared by Congress and provide insight into the intent behind newly enacted legislation, helping to understand the purpose and application of the new code section.

Question 18

Which of the following has the highest authoritative weight?

Accepted Answer

Revenue rulings are official interpretations by the IRS and have the highest authoritative weight. They provide guidance for how tax laws should be applied in specific situations and are binding on the IRS when dealing with taxpayers. Tax articles, private letter rulings, tax services, and textbooks are useful sources of information but do not have the same level of authority as revenue rulings.

Question 19

Princess, who resides in the 2nd Circuit, recently found a circuit court case that is favorable to her income tax research question. Which of the following circuits would she prefer to have issued the opinion?

Accepted Answer

The 2nd Circuit or the Federal Circuit would be the preferred circuits for Princess because they are the most likely to follow the favorable precedent.

Question 20

Which of the following is not considered a secondary authority?

Accepted Answer

Private Letter Ruling is a primary authority as it is an official interpretation issued by the IRS. The other options listed are all secondary authorities, meaning they provide analysis or interpretation of primary authorities such as statutes, regulations, and case law.

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

In a planning context,

Generally, code sections are arranged (grouped together) :

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

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

Which of the following has the lowest authoritative weight?

The regulation with the lowest authoritative weight is the:

Josephine is considering taking a 6-month rotation in Paris for her job. Which type of authority may be especially helpful in determining the tax consequences of Josephine's job in Paris?

Which of the following committees typically initiates tax legislation?

According to Statement on Standards for Tax Services No. 1, a tax practitioner can recommend a tax return position:

If the President vetoes tax legislation, Congress:

Which of the following has the highest authoritative weight?

Which of the following is not a source of a tax practitioner's professional responsibilities?

Circular 230 was issued by:

Which of the following is not a common tool used in conducting tax research?

Jeremy has a new client. He has identified a research question that relates to a transaction that the client completed several months ago. This type of research question willprimarily involve:

Jaime recently found a "favorable" trial level court opinion directly on point for her tax question. Which trial level court would she prefer to have issued the opinion?

Edie would like to better understand a new code section enacted four weeks ago. Which of the following authorities will help Edie understand the newly enacted code section?

Which of the following has the highest authoritative weight?

Princess, who resides in the 2nd Circuit, recently found a circuit court case that is favorable to her income tax research question. Which of the following circuits would she prefer to have issued the opinion?

Which of the following is not considered a secondary authority?