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Test Bank For Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill
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Test Bank For Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill
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,Name: Class: Date:TEST BANK FOR FEDERAL TAX RESEARCH 12TH EDITION BY ROBY SAWYERS,
STEVEN GILL
Answers are at the end of Each Chapter
Chapter 1
Indicate whether the statement is true or false.
1. Tax planning has a higher likelihood of success when a tax practitioner is dealing with an open transaction instead of a
closed transaction.
a. True
b. False
2. If a CPA becomes aware of an error in a tax return, he or she must immediately notify the IRS.
a. True
b. False
3. The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.
a. True
b. False
4. An attorney, CPA, or enrolled agent may use advertising to obtain clients under Circular 230.
a. True
b. False
5. Circular 230 bans tax practitioners from giving written advice on a federal tax issue based on the likelihood of an audit.
a. True
b. False
6. Tax research is required only for tax planning, not preparing returns.
a. True
b. False
7. The three categories of modern tax practice include tax planning, tax compliance, and tax research.
a. True
b. False
8. Tax practice can be defined as the application of the tax laws to specific accounting situations.
a. True
b. False
9. State Boards of Accountancy are the organizations with responsibility to license public accountants in each state.
a. True
b. False
10. A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer’s estimates.
Page 1
,Name: Class: Date:
a. True
b. False
11. The ABA Model Code of Professional Responsibility has the force of law and covers all attorneys practicing in the
United States.
a. True
b. False
12. Drafting wills is a part of a CPA’s professional duties.
a. True
b. False
13. To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at
least five years.
a. True
b. False
14. Tax avoidance and tax evasion are both illegal.
a. True
b. False
15. Paid tax return preparers must register with the IRS and obtain a PTIN.
a. True
b. False
16. Tax practitioners (as defined by the IRS) are regulated by Circular 230.
a. True
b. False
17. Enrolled actuaries are allowed to practice before the IRS.
a. True
b. False
18. A member of the AICPA may never disclose confidential taxpayer information under the AICPA rules.
a. True
b. False
19. A CPA can rely without verification on information given to the CPA by a taxpayer unless the information appears to
be incorrect.
a. True
b. False
20. An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.
a. True
b. False
Page 2
, Name: Class: Date:
Indicate the answer choice that best completes the statement or answers the question.
21. Under the AICPA Code of Professional Conduct, which of the following actions would constitute deceptive
advertising?
a. advertising too frequently
b. implying that the CPA had the ability to influence an IRS official
c. promising a favorable result without justification
d. implying that the CPA had the ability to influence an IRS official and
promising a favorable result without justification
22. Which of the following is CORRECT about a CPA’s responsibility with regard to tax return positions under
Statements on Standards for Tax Services No. 1 (SSTS No. 1)?
a. A CPA may not base his or her position on authority that is not approved by the IRS under Section 6662
(accuracy-related penalty).
b. A CPA may sign a return which has a tax position that has a realistic possibility of being sustained on the
merits.
c. A CPA may not sign a return which has any tax position that is not fully disclosed.
d. All of these are correct.
23. Tax evasion is:
a. a fraudulent act involving illegal nonpayment of taxes
b. one of the objectives of tax planning
c. an act of deferring tax payments to future periods
d. the same as tax avoidance as both of them result in nonpayment of taxes
24. Who can represent a taxpayer before the IRS Appeals Office under Circular 230?
a. a CPA
b. an officer of a corporation may represent the corporation
c. an attorney
d. all of these are correct
e. both a CPA and an attorney
25. Which of the following statements is CORRECT regarding the unauthorized practice of law?
a. Taxpayers may not represent themselves in Tax Court.
b. A CPA cannot express a legal opinion on a non-tax matter.
c. A CPA cannot draft wills or trust instruments.
d. Both b and c are correct.
26. The Lowell Bar Association v. Loeb case addressed the issue of:
a. unauthorized practice of law by nonattorneys engaged in tax practice
b. legal research by taxpayers
c. attorneys and CPAs working together in a practice
d. all of these are correct
27. Which of the following statements best describes Circular 230?
Page 3
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