ece 644 test bank for taxation of individuals 4th edition spilker
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Chapter 02
Tax Compliance, the IRS, and Tax Authorities
True / False Questions
1. Corporations are required to file a tax return annually regardless of their taxable
income.
True False
2. The tax return filing requirements for individual taxpayers only depend on the
taxpayer's filing status.
True False
3. If a taxpayer is due a refund, she does not have to file a tax return.
True False
4. If April 15th falls on a Saturday, the due date for individual tax returns will be on
Monday, April 17th.
True False
5. If a taxpayer is unable to file a tax return by its original due date, the taxpayer can
request an automatic 9-month extension to file the return.
True False
6. An extension to file a tax return does not extend the due date for tax payments.
True False
7. The statute of limitations for IRS assessment generally ends four years after the date
a tax return is filed.
True False
8. For fraudulent tax returns, the statute of limitations for IRS assessment is ten years.
True False
9. The IRS DIF system checks each tax return for mathematical mistakes.
True False
, Full file at http://testbankscafe.eu/Test-Bank-for-Taxation-of-Individuals-4th-Edition-Spilker,-Ayers,-Robinson,-Outslay,-
Worsham,-Barrick,-Weaver
10. Joel claimed a high amount of charitable contributions as a deduction on his tax return
relative to taxpayers with similar income levels. The information matching program is
the IRS program most likely to identify Joel's tax return for audit.
True False
11. Office examinations are the most common type of IRS audit.
True False
12. The three basic types of IRS examinations are computer exams, office exams, and
business exams.
True False
13. The "30-day" letter gives the taxpayer the opportunity to request an appeals
conference or agree to the proposed IRS adjustment.
True False
14. The "90-day" letter gives the taxpayer the opportunity to pay the proposed tax
adjustment or file a petition in the U.S. District Court to hear the case.
True False
15. If a taxpayer has little cash and a very technical tax case that she feels very strongly
that the tax rules are "on her side," she should prefer to have her case tried in the
U.S. Tax Court.
True False
16. In researching a tax issue, Eric finds that the U.S. Circuit Court of Appeals for the
Federal Circuit previously has ruled in favor of his tax position, whereas the 11 th Circuit
(Eric's circuit) previously has ruled against his tax position. If Eric is contemplating
litigating his tax position with the IRS, he should prefer to have his case first tried by
the U.S. Tax Court.
True False
17. If a taxpayer loses a case at the Circuit Court level, he is granted an automatic appeal
hearing with the Supreme Court.
True False
18. Secondary authorities are official sources of the tax law with a lesser "weight" than
primary authorities.
True False
19. Revenue rulings and revenue procedures are examples of primary authorities.
True False
, Full file at http://testbankscafe.eu/Test-Bank-for-Taxation-of-Individuals-4th-Edition-Spilker,-Ayers,-Robinson,-Outslay,-
Worsham,-Barrick,-Weaver
20. The Internal Revenue Code and tax treaties are examples of statutory authorities.
True False
21. Because the U.S. District Court hears a broader set of cases, decisions by the U.S.
District Court may be considered to have more authoritative weight than the U.S.
Court of Federal Claims.
True False
22. Temporary Regulations have more authoritative weight than revenue rulings.
True False
23. Proposed and Temporary Regulations have the same authoritative weight.
True False
24. An acquiescence indicates that the IRS lost a court case and that it has decided to
follow the court's ruling in the future.
True False
25. The Internal Revenue Code of 1986 is the name of the current tax code.
True False
26. As required by the Constitution, all tax bills are supposed to originate in the House of
Representatives.
True False
27. The Senate Ways and Means Committee is in charge of drafting tax bills in the U.S.
Senate.
True False
28. Closed facts are especially conducive to tax planning.
True False
29. Of the two basic types of tax services, beginning tax researchers often prefer topical
tax services.
True False
30. In researching a question of fact, the researcher will focus her efforts on identifying
authorities with fact patterns similar to her client's facts.
True False
, Full file at http://testbankscafe.eu/Test-Bank-for-Taxation-of-Individuals-4th-Edition-Spilker,-Ayers,-Robinson,-Outslay,-
Worsham,-Barrick,-Weaver
31. Under the Statement on Standards for Tax Services, a CPA may recommend a tax
return position if the position is frivolous and the position is not disclosed on the tax
return.
True False
32. In general, a CPA will satisfy his professional responsibilities under the Statement on
Standards for Tax Services when recommending a tax return position if he complies
with the standards imposed by the applicable tax authority.
True False
33. Under the tax law, taxpayers may be subject to both civil and criminal penalties for
underpaying their tax liability (e.g., due to fraud).
True False
34. A taxpayer can avoid an underpayment penalty if there is substantial authority that
supports her tax return position.
True False
35. If the IRS assesses additional tax upon audit, a taxpayer may be subject to interest
and penalties on the underpayment.
True False
Multiple Choice Questions
36. Which of the following is not a factor that determines whether a taxpayer is required
to file a tax return?
A. Filing
status.
B. Taxpayer's gross
income.
C. Taxpayer's
employment.
D. Taxpayer's
age.
E. None of
these.
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