Question 1

Circular 230 requires that the tax practitioner use the "best practices" of the tax profession in carrying out a tax engagement. Specify what some of these best practices entail.

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Question 2

In connection with the taxpayer penalty for substantial understatement of tax liability, what defenses (if any) are available?

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Question 3

The client has decided to dispute the Revenue Agent's Report. What is the tax advisor's next step?

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Question 4

Congress has set very high goals as to the number of Forms 1040 that should be filed electronically. Summarize the benefits of e-filing, from the perspective of both the taxpayer and the government.

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Question 5

The taxpayer or a tax advisor may be subject to penalties if there is a misstatement of the valuation of an item reported on the tax return. Describe how these penalties work.

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Question 6

A taxpayer penalty may be waived if there is shown to be reasonable cause for the misstatement on the tax return. The courts have applied this standard strictly. List three or more assertions for a waiver of a taxpayer penalty that courts have found not to constitute reasonable cause. Example: Ignorance of the tax law.

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Question 7

Does the tax preparer enjoy an "attorney-client privilege" of confidentiality with his or her clients?

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Question 8

Certain individuals are more likely than others to have the Form 1040 audited by the IRS. List at least five factors that may increase above the national norms one's chances of audit.

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Question 9

Carole, a CPA, feels that she cannot act as an aggressive advocate for tax clients in today's environment. What aspects of the ethical conduct of a tax practice might have influenced Carole's attitude?

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Question 10

When a tax dispute is resolved, interest is paid by or to the government. List three or more features of the interest computations that arise when a tax return is audited.

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Question 11

If a taxpayer is audited by the IRS and is unwilling to accept the findings of the agent, how does the taxpayer's audit strategy change when the dispute is taken to the IRS Appeals Division? Hint: What are the "hazards of litigation?"

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Question 12

CPA Jennifer has heard about the AICPA's Statements on Standards for Tax Services. Although Jennifer is a licensed CPA in her state, she is not a member of the AICPA. How do the Statements affect Jennifer's tax practice?

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Question 13

How is the tax law affected by Federal criminal statutes?

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Quiz 17: Tax Practice and Ethics