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Test Bank for Pearson's Federal Taxation 2025 Corporations, Partnerships, Estates, & Trusts, 38th Edition by Luke E. Richardson, Franklin$29.49
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Test Bank for Pearson's Federal Taxation 2025 Corporations, Partnerships, Estates, & Trusts, 38th Edition by Luke E. Richardson, Franklin
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Federal Taxation
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Federal Taxation
Test Bank for Pearson's Federal Taxation 2025 Corporations, Partnerships, Estates, & Trusts, 38e 38th Edition by Luke E. Richardson, Mitchell Franklin. Complete chapters (Chap 1 to 15) are included. Test bank is displayed in reversed order so you can make sure all chapters are included.
Tax Rese...
NOTE: The chapters in this document are displayed in reverse order,
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,Pearson's Fed. Taxation 2025: Corp., 38e (Richardson et al.) All Chapters test bank ✅
Chapter C15: Administrative Procedures
Chap 15 ➡ Chap 1 ✅
LO1: Role of the Internal Revenue Service
1) The Internal Revenue Service is part of the Latest Edition - 2025 ✅
A) Congress.
B) Treasury Department.
C) Federal Bureau of Investigation.
D) U.S. Customs Department.
Answer: B
Explanation: The IRS is part of the Treasury Department.
Page Ref.: C:15-2
Objective: 1
2) Explain how the Internal Revenue Service is organized to be efficient and client-oriented.
Answer: The IRS is organized functionally into four divisions: (1) Wage and Investment, (2) Small
Business, (3) Middle Market/Large Corporate, and (4) Tax Exempt. Each division is headed by a
divisional director.
The Wage and Investment Division is responsible for individual taxpayers who report only wage and
investment income. Most of these taxpayers file Forms 1040, 1040A, or 1040EZ. The Small Business
Division is responsible for sole proprietors, individuals with supplemental income, and small
corporations and partnerships. Most of these taxpayers file Forms 1065 and 1120S or Schedules C, E, and
F. The Middle Market/Large Corporate Division is responsible for corporations with assets of $5 million
or more. Most of these taxpayers file Form 1120. The tax Exempt Division is responsible for tax-exempt
organizations, employee plans, and state and local governments. Most of these entities file forms relating
to tax exempt status.
The shift to a functional mode of organization reflects Congress's desire to render the IRS more efficient
and client-oriented. Through this mode of organization, tax administrators can focus on their areas of
technical expertise, and taxpayers can deal with the same technical experts wherever they reside.
Page Ref.: C:15-2
Objective: 1
LO2: Audits of Tax Returns
1) The majority of the individual tax returns that are audited are selected under the DIF program.
Answer: FALSE
Explanation: IRS utilizes different methods.
Page Ref.: C:15-3
Objective: 2
2) The IRS will issue a 90-day letter (a Statutory Notice of Deficiency) if the taxpayer does not file a
protest letter within 30 days of the date of the 30-day letter.
Answer: TRUE
Explanation: If a taxpayer fails to respond within 30 days, IRS issues a 90 day letter.
Page Ref.: C:15-7
Objective: 2
1
,3) The 90-day letter (Statutory Notice of Deficiency) gives the taxpayer 90 days to file a petition with the
Tax Court or to pay the disputed tax.
Answer: TRUE
Explanation: Taxpayer may pay the tax or petition court.
Page Ref.: C:15-7
Objective: 2
4) If the taxpayer has credible evidence, the IRS bears the burden of proof in a tax dispute.
Answer: TRUE
Explanation: Burden of proof is on the IRS.
Page Ref.: C:15-8
Objective: 2
5) The program specifically designed to identify returns with a high potential for a deficiency assessment
is the
A) TCMP.
B) DIF program.
C) instant audit program.
D) 1040 program.
Answer: B
Explanation: DIF Is designed to identify returns with a high potential for deficiency assessment.
Page Ref.: C:15-3
Objective: 2
6) Identify which of the following statements is false.
A) The majority of the individual tax returns that are audited are selected under the DIF program.
B) The TCMP audit program has been temporarily suspended by the IRS and replaced in part by lifestyle
audits.
C) The IRS is authorized to pay a reward to individuals who provide information resulting in increased
collections.
D) All of the above are false.
Answer: A
Explanation: IRS utilizes multiple methods for audit selection.
Page Ref.: C:15-4
Objective: 2
2
, 7) Identify which of the following statements is true.
A) If a taxpayer has been audited in at least one of the two previous years on the same item and the
earlier audit did not result in any additional tax owed, the taxpayer may qualify for the special audit
relief rule.
B) A taxpayer can request and always receive an exemption from an audit by the IRS if his return was
audited in at least one of the two previous years and the previous audit did not result in any change to
his tax liability.
C) The signing of Form 870 allows the taxpayer to wait for 30 interest-free days after the billing date to
pay the tax.
D) All of the above are true.
Answer: A
Explanation: The taxpayer may qualify if certain requirements are met.
Page Ref.: C:15-5
Objective: 2
8) Identify which of the following statements is false.
A) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question
involves an especially complex tax issue.
B) If the taxpayer being audited does not concur with the proposed assessment, the Service is required to
send the taxpayer a 30-day letter detailing the proposed changes and the available appeals process.
C) During the audit process, if the taxpayer concurs with the assessment of tax by the IRS and signs Form
870 (Waiver of Restrictions on Assessment and Collection of Deficiency in Tax), then the taxpayer is
precluded from filing a refund suit.
D) Interest on a deficiency accrues from the due date of the return through the payment date.
Answer: C
Explanation: This form indicates that the taxpayer waives any restrictions on the IRS's authority to
assess the tax and consents to the IRS's collecting it. However, signing Form 870 does not preclude the
taxpayer from filing a refund claim later.
Page Ref.: C:15-6
Objective: 2
9) Identify which of the following statements is false.
A) Appeals officers usually have the operating authority to settle disputes with taxpayers based on the
"hazards of litigation."
B) When an appeals officer is dealing with an "appeals coordinated issue," he has the authority to settle
with the taxpayer based on the "hazards of litigation."
C) A Technical Advice Memorandum may be requested by an IRS auditor if the transaction in question
involves an especially complex tax issue.
D) If the taxpayer and the appeals officer fail to reach agreement, the IRS issues a 90-day letter.
Answer: B
Explanation: If the matter involves an appeals coordinated issue, the appeals officer must obtain
concurrence or guidance from a director of appeals to reach a settlement.
Page Ref.: C:15-7
Objective: 2
3
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