Question 1

You are preparing for an audit with an IRS agent for an important client. Your research has uncovered several favorable rulings and court decisions. What are the key points that should guide you in evaluating sources of the law?

Accepted Answer

The answer of You are preparing for an audit with...

Question 2

State the purposes for which a file memorandum is designed.

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The answer of State the purposes for which a file...

Question 3

In slides and other visual aids, fancy fonts and many colors should be used tocreate a more sophisticated presentation.

Accepted Answer

Using too many fancy fonts and colors can make a presentation look cluttered and distract from the main message. It's better to use a clean, simple design to keep the audience focused on the content.

Question 4

Identify the major elements of a client letter, and briefly discuss the difference between a letter toa sophisticated client and toan unsophisticated client.

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The answer of Identify the major elements of a client...

Question 5

Amy and Frank got married and they have approached you seeking your views about the gift tax and income tax consequences on the following facts. 
As per the prenuptial agreement, Amy gave toFrank $100,000 of appreciated stock on the morning of their wedding. Amy's basis in the stock was $35,000. Under the terms of the agreement, Frank surrendered all other marital rights and claims toAmy's assets in exchange for these securities. Both Frank and Amy are residents of Arizona. 
The file memoyou prepared contains the following legal conclusions, based on controlling authority: 
• IRC Section 2501 imposes a tax on the transfer of property by gift, not when it is received by the donee, but upon the transfer. The donor is taxed, not the donee. 
• The Supreme Court has held that prenuptial transfers in relinquishment of marital rights are not adequate and full consideration for the transfer of property. So, the transfer is treated as a gift. 
• Since the prenuptial agreement is enforceable only after the marriage, the transfer has not taken place until after the marriage occurred. Thus, the transfer is eligible for the gift tax marital deduction. 
• Although the transaction resulted in a gift, nogift tax is imposed due tothe application of the annual exclusion and the unlimited gift tax marital deduction. 
• Neither party recognizes gross income upon release of the marital rights. Gross income does not include the value of property acquired by gift. 
• The donee takes the donor's income tax basis in the transferred property. 
Based on the information provided above, draft a client letter toan unsophisticated client explaining the gift tax consequences and the income tax consequences of the stock transfer.

Accepted Answer

The answer of Amy and Frank got married and they...

Question 6

More research engagements entail closed-fact settings than open-fact situations.

Accepted Answer

Closed-fact settings involve research engagements where the facts are known and fixed, while open-fact situations involve research engagements where the facts are unknown or uncertain.

Question 7

IRS agents are not bound by District Court decisions.

Accepted Answer

District Court decisions are not binding on IRS agents as they are only binding within the specific jurisdiction of the court. IRS agents follow IRS guidelines and regulations, which may be influenced by higher court rulings or IRS policy changes.

Question 8

Even if all of the judicial precedent supports a taxpayer's position, the court still may hold against the taxpayer.

Accepted Answer

Courts may consider other factors such as legislative intent, public policy, or changes in law, which can lead to a decision against the taxpayer despite supportive judicial precedent.

Question 9

Identify five types of tax-related communications.

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The answer of Identify five types of tax-related communications....

Quiz 10: Communicating Research Results