Question 1

A taxpayer should always minimize his or her tax liability.

Accepted Answer

While minimizing tax liability can be financially beneficial, it must be done within the confines of the law. Overly aggressive tax strategies can lead to legal issues, and there are situations where taxpayers might choose not to minimize taxes, such as supporting public services through taxes or taking advantage of tax credits that require a higher taxable income.

Question 2

Revenue Rulings issued by the National Office of the IRS carry the same legal force and effect as Regulations.

Accepted Answer

Revenue Rulings are the IRS's official interpretation of how the law is applied to specific factual situations, whereas Regulations (also known as Treasury Regulations) are the IRS's official interpretation of the tax code itself and carry more legal weight. Regulations are generally issued following a notice and comment period and are published in the Federal Register, making them more formal and authoritative than Revenue Rulings.

Question 3

A tax professional need not worry about the relative weight of authority within the various tax law sources.

Accepted Answer

A tax professional should carefully consider the relative weight of authority within the various tax law sources in order to provide accurate and reliable advice to their clients.

Question 4

The first codification of the tax law occurred in 1954.

Accepted Answer

The first codification of the tax law in the United States occurred with the Internal Revenue Code of 1939, not 1954. The 1954 and later 1986 revisions were significant updates to the tax code, but not the first codification.

Question 5

The IRS is not required to make a letter ruling public.

Accepted Answer

The answer of The IRS is not required to make...

Question 6

In recent years,Congress has been relatively successful in simplifying the Internal Revenue Code.

Accepted Answer

Over the years, the Internal Revenue Code (IRC) has grown to be incredibly complex, and there have been limited efforts to simplify it.

Question 7

Technical Advice Memoranda deal with completed transactions.

Accepted Answer

Technical Advice Memoranda (TAMs) provide guidance on the application of tax laws to completed transactions or situations. They are issued by the IRS Office of Chief Counsel in response to specific requests from IRS personnel or taxpayers.

Question 8

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

Accepted Answer

Revenue Procedures provide guidance to the IRS personnel on how to administer tax laws and regulations. They do not have the force of law, but they do have legal implications for taxpayers as they represent the position of the IRS on certain issues.

Question 9

Determination letters usually involve completed transactions.

Accepted Answer

The answer of Determination letters usually involve completed transactions....

Question 10

This Internal Revenue Code section citation is incorrect: § 212(1).

Accepted Answer

The answer of This Internal Revenue Code section citation is...

Question 11

The following citation can be a correct citation: Rev.Rul.95-271,1995-64 I.R.B.18.

Accepted Answer

The answer of The following citation can be a correct...

Question 12

A letter ruling applies only to the taxpayer who asks for and obtains a letter ruling.

Accepted Answer

A letter ruling is a written statement issued by the IRS in response to a taxpayer's request for guidance on a specific tax issue. The ruling applies only to the taxpayer who requested it and cannot be relied upon by others.

Question 13

Temporary Regulations are only published in the Internal Revenue Bulletin.

Accepted Answer

Temporary Regulations are initially published in the Federal Register and then later published in the Internal Revenue Bulletin.

Question 14

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

Accepted Answer

A Revenue Ruling is an administrative source of Federal tax law, issued by the Internal Revenue Service (IRS) to interpret the tax laws and guide taxpayers.

Question 15

Rules of tax law do not include Revenue Rulings and Revenue Procedures.

Accepted Answer

Revenue Rulings and Revenue Procedures are part of the Internal Revenue Service's interpretation and administration of tax laws. They provide guidance to taxpayers and are considered sources of authority, but they are not part of the actual tax law itself.

Question 16

A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S.Court of Federal Claims.Only in the Tax Court can jurisdiction be obtained without first paying the assessed tax deficiency.

Accepted Answer

The U.S. Tax Court allows taxpayers to dispute their tax deficiencies before paying them, unlike the U.S. Court of Federal Claims, where the taxpayer must first pay the assessed tax and then sue for a refund.

Question 17

Subchapter D refers to the "Corporate Distributions and Adjustments" section of the Internal Revenue Code.

Accepted Answer

The answer of Subchapter D refers to the "Corporate Distributions...

Question 18

In general,regulations are issued immediately after a statute is enacted.

Accepted Answer

Regulations are typically drafted and issued by the relevant agency or department after the statute has been enacted and can take some time to develop and implement.

Question 19

Technical Advice Memoranda may not be cited as precedents by taxpayers.

Accepted Answer

Technical Advice Memoranda (TAMs) are written guidance provided by the IRS to its field personnel, and are not intended as official interpretations of the law or as precedents for use by taxpayers. As such, they cannot be cited as legal precedent by taxpayers in any subsequent proceedings.

Question 20

Post-1984 letter rulings may be substantial authority for purposes of the accuracy-related penalty in § 6662.

Accepted Answer

According to Treasury Regulation § 1.6662-4(d)(3)(iii), post-1984 letter rulings may be considered substantial authority for purposes of the accuracy-related penalty in § 6662.

Quiz 2: Working With the Tax Law