From

1.RulesoftaxlawdonotincludeRevenueRulingsandRevenueProcedures.

a.True

b.False

ANSWER:False

RATIONALE:RulesoftaxlawdoincludeTreasuryDepartmentpronouncements.

2.Ataxprofessionalneednotworryabouttherelativeweightofauthoritywithinthevarioustaxlawsources.

a.True

b.False

ANSWER:False

RATIONALE:Quitethecontrary.

3.Inrecentyears,CongresshasbeenrelativelysuccessfulinsimplifyingtheInternalRevenueCode.

a.True

b.False

ANSWER:False

RATIONALE:EachyeartheCodebecomesmoreandmorecomplex.

4.Ataxpayershouldalwaysminimizehisorhertaxliability.

a.True

b.False

ANSWER:False

RATIONALE:Ataxpayershouldmaximizetheafter-taxreturninconjunctionwiththeoveralleconomiceffect.

5.Thefirstcodificationofthetaxlawoccurredin1954.

a.True

b.False

ANSWER:False

RATIONALE:Thefirstcodificationofthetaxlawoccurredin1939.

6.TheCodesectioncitationisincorrect:§212(1).

a.True

b.False

ANSWER:False

RATIONALE:SomeCodesectionsomitthesubsectionanduseparagraphdesignationasthefirstsubpartasdoes§212.

7.SubchapterDreferstothe“CorporateDistributionsandAdjustments”sectionoftheInternalRevenueCode.

a.True

b.False

ANSWER:False

RATIONALE:The correct subchapter for “Corporate Distributions and Adjustments” is Subchapter C.

8.Regulationsaregenerallyissuedimmediatelyafterastatuteisenacted.

a.True

b.False

ANSWER:False

RATIONALE:Thereverseistrue.RegulationsrequiretimetobeissuedandmayneverbeissuedonaparticularstatutorychangeinaCodesection.

9.TemporaryRegulationsareonlypublishedintheInternalRevenueBulletin.

a.True

b.False

ANSWER:False

RATIONALE:TheyarepublishedintheFederalRegisterandtheInternalRevenueBulletin.

10.RevenueRulingsissuedbytheNationalOfficeoftheIRScarrythesamelegalforceandeffectasRegulations.

a.True

b.False

ANSWER:False

RATIONALE:TheydonotcontainthesamelegalforceasRegulations.Thatis,thelegalforceisless.

11.ARevenueRulingisajudicialsourceofFederaltaxlaw.

a.True

b.False

ANSWER:False

RATIONALE:ARevenueRulingisanadministrativesource.

12.Thefollowingcitationcanbeacorrectcitation:Rev.Rul.95-271,1995-64I.R.B.18.

a.True

b.False

ANSWER:False

RATIONALE:ThecitationgivenreferstotheBulletinissuedinthe64thweekof1995.Becauseayearcontainsonly52weeks,thecitationcannotbecorrect.

13.RevenueProceduresdealwiththeinternalmanagementpracticesandproceduresoftheIRS.

a.True

b.False

ANSWER: True

14.Post­1984letterrulingsmaybesubstantialauthorityforpurposesoftheaccuracy­relatedpenaltyin§6662.

a.True

b.False

ANSWER: True

15.Aletterrulingappliesonlytothetaxpayerwhoasksforandobtainsaletterruling.

a.True

b.False

ANSWER: True

16.TheIRSisnotrequiredtomakealetterrulingpublic.

a.True

b.False

ANSWER:False

RATIONALE:ThelawnowrequirestheIRStomakeletterrulingsavailableforpublicinspectionafteridentifyingdetailsaredeleted.

17.Determinationlettersusuallyinvolvefinalizedtransactions.

a.True

b.False

ANSWER: True

18.TechnicalAdviceMemorandadealwithcompletedtransactions.

a.True

b.False

ANSWER:True

RATIONALE:TAMsdealwithcompletedtransactions.

19.TechnicalAdviceMemorandamaynotbecitedasprecedentsbytaxpayers.

a.True

b.False

ANSWER: True

20.AtaxpayermustpayanytaxdeficiencyassessedbytheIRSandsueforarefundtobringsuitintheU.S.CourtofFederalClaims.OnlyintheTaxCourtcanjurisdictionbeobtainedwithoutfirstpayingtheassessedtaxdeficiency.

a.True

b.False

ANSWER: True

21.InaU.S.DistrictCourt,ajurycandecidebothquestionsoffactandquestionsoflaw.

a.True

b.False

ANSWER:False

RATIONALE:Questionsoflawareresolvedbythepresidingjudge.

22.ThreejudgeswillnormallyheareachU.S.TaxCourtcase.

a.True

b.False

ANSWER:False

RATIONALE:MostTaxCourtcasesareheardanddecidedbyonlyonejudge.Onlywhenmoreimportantornoveltaxissuesareinvolvedwilltheentirecourtdecidethecase.

23.AtaxpayercanobtainajurytrialintheU.S.TaxCourt.

a.True

b.False

ANSWER:False

RATIONALE:AjurytrialisavailableonlyinaU.S.DistrictCourt.

24.AtaxpayermustpayanytaxdeficiencyassessedbytheIRSandsueforarefundtobringsuitintheU.S.DistrictCourt.

a.True

b.False

ANSWER:True

RATIONALE:The tax deficiencymustbepaidbeforesuitcanbeinstitutedineithertheU.S.DistrictCourtortheU.S.CourtofFederalClaims.

25.ArizonaisinthejurisdictionoftheEighthCircuitCourtofAppeals.

a.True

b.False

ANSWER:False

RATIONALE:ArizonaisinthejurisdictionoftheNinthCircuit.

26.TexasisinthejurisdictionoftheSecondCircuitCourtofAppeals.

a.True

b.False

ANSWER:False

RATIONALE:TexasisinthejurisdictionoftheFifthCircuit.

27.TheGolsenrulehasbeenoverturnedbytheU.S.SupremeCourt.

a.True

b.False

ANSWER:False

RATIONALE:TheGolsenruleisfollowedbytheU.S.TaxCourt.

28.ThegrantingofaWritofCertiorariindicatesthatatleastfourmembersoftheSupremeCourtbelievethatanissueisofsufficientimportancetobeheardbythefullcourt.

a.True

b.False

ANSWER:True

RATIONALE:ThegrantingoftheWritindicatesthatatleastfourmembersoftheSupremeCourtbelievethatanissueisofsufficientimportancetobeheardbythefullCourt.

29.The“petitioner”referstothepartyagainstwhomasuitisbrought.

a.True

b.False

ANSWER:False

RATIONALE:The“defendant”isthepartyagainstwhomasuitis brought.

30.Theterm“petitioner”isasynonymfor“defendant.”

a.True

b.False

ANSWER:False

RATIONALE:Theterm“petitioner”isasynonymfor“plaintiff.”

31.TheU.S.TaxCourtmeetsmostofteninWashington,D.C.

a.True

b.False

ANSWER:False

RATIONALE:TaxCourtjudgestraveltovariouscities.

32.Thereare11geographicU.S.CircuitCourtofAppeals.

a.True

b.False

ANSWER: True

33.Thefollowingcitationiscorrect:LarryG.Mitchell,131T.C.215(2008).

a.True

b.False

ANSWER: True

34.TheIRSissuesanacquiescenceornonacquiescenceonlyforregularTaxCourtdecisions.

a.True

b.False

ANSWER:False

RATIONALE:After1990,theIRSissuesitsacquiescenceprogramforotherciviltaxcases.

35.ThereisadirectconflictbetweenaCodesectionadoptedin2008andatreatywithFrance(signedin2012).TheCodesectioncontrols.

a.True

b.False

ANSWER:False

RATIONALE:Themostrecentitemtakesprecedence.

36.TheIndextoFederalTaxArticles(publishedbyWarren,Gorham,andLamont)isavailableinprintandelectronicformats.

a.True

b.False

ANSWER:False

RATIONALE:Itisavailableonlyinprintform.

37.AU.S.DistrictCourtisthelowesttrialcourt.

a.True

b.False

ANSWER: True

38.Theresearchprocessshouldbeginwithataxservice.

a.True

b.False

ANSWER:False

RATIONALE:Iftheresearchissimple,aresearchermaystartwiththeCodeorRegulations.

39.Electronicdatabasesaremostfrequentlysearchedbythekeywordapproach.

a.True

b.False

ANSWER: True

40.Thetestforwhetherachildqualifiesfordependencystatusisfirstconductedunderthequalifiedchildrequirement.

a.True

b.False

ANSWER: True

41.ABluebookopinionissubstantialauthorityforpurposesoftheaccuracyrelatedpenalty.

a.True

b.False

ANSWER: True

42.Theprimarypurposeofeffectivetaxplanningistoreduceordeferthetaxinthecurrenttaxyear.

a.True

b.False

ANSWER:False

RATIONALE:Thisisasecondarytaxobjective.

43.Deferringincometoasubsequentyearisconsideredtobetaxavoidance.

a.True

b.False

ANSWER: True

44.Taxplanningusuallyinvolvesacompletedtransaction.

a.True

b.False

ANSWER:False

RATIONALE:Taxplanningusuallyinvolvesaproposedtransaction.

45.TheRegulationsectionoftheCPAexamisapproximately60%Taxationand40%LawProfessionalResponsibilities.

a.True

b.False

ANSWER: True

46.TheInternalRevenueCodewasfirstcodifiedinwhatyear?

a.1913.

b.1923.

c.1939.

d.1954.

e.1986.

ANSWER: c

47.TaxbillsarehandledbywhichcommitteeintheU.S.HouseofRepresentatives?

a.TaxationCommittee.

b.WaysandMeansCommittee.

c.FinanceCommittee.

d.BudgetCommittee.

e.Noneoftheabove.

ANSWER: b

48.Federaltaxlegislationgenerallyoriginatesinwhatbody?

a.InternalRevenueService.

b.SenateFinanceCommittee.

c.HouseWaysandMeansCommittee.

d.SenateFloor.

e.Noneoftheabove.

ANSWER: c

49.SubtitleAoftheInternalRevenueCodecoverswhichofthefollowingtaxes?

a.Incometaxes.

b.Estateandgifttaxes.

c.Excisetaxes.

d.Employmenttaxes.

e.Alloftheabove.

ANSWER: a

50.In§212(1),thenumber(1)standsforthe:

a.Sectionnumber.

b.Subsectionnumber.

c.Paragraphdesignation.

d.Subparagraphdesignation.

e.Noneoftheabove.

ANSWER: c

51.WhichoftheseisnotacorrectcitationtotheInternalRevenueCode?

a.Section211.

b.Section1222(1).

c.Section2(a)(1)(A).

d.Section280B.

e.Allofabovearecorrectcites.

ANSWER: e

52.Whichofthefollowingisnotanadministrativesourceoftaxlaw?

a.FieldServiceAdvice.

b.RevenueProcedure.

c.TechnicalAdviceMemoranda.

d.GeneralCounselMemorandum.

e.Alloftheaboveareadministrativesources.

ANSWER: e

53.Whichofthefollowingsourceshasthehighesttaxvalidity?

a.RevenueRuling.

b.RevenueProcedure.

c.Regulations.

d.InternalRevenueCodesection.

e.Noneoftheabove.

ANSWER: d

54.WhichofthefollowingtypesofRegulationshasthehighesttaxvalidity?

a.Temporary.

b.Legislative.

c.Interpretive.

d.Procedural.

e.Noneoftheabove.

ANSWER: b

55.WhichstatementisnottruewithrespecttoaRegulationthatinterpretsthetaxlaw?

a.IssuedbytheU.S.Congress.

b.IssuedbytheU.S.TreasuryDepartment.

c.Designedtoprovideaninterpretationofthetaxlaw.

d.CarriesmorelegalforcethanaRevenueRuling.

e.Alloftheabovestatementsaretrue.

ANSWER:a

RATIONALE:TreasuryRegulationsareissuedbytheU.S.TreasuryDepartment.

56.InaddressingtheimportanceofaRegulation,anIRSagentmust:

a.GiveequalweighttotheCodeandtheRegulations.

b.GivemoreweighttotheCoderatherthantoaRegulation.

c.GivemoreweighttotheRegulationratherthantotheCode.

d.GivelessweighttotheCoderatherthantoaRegulation.

e.Noneoftheabove.

ANSWER: a

57.Whichitemmaynotbecitedasaprecedent?

a.Regulations.

b.TemporaryRegulations.

c.TechnicalAdviceMemoranda.

d.U.S.DistrictCourtdecision.

e.Noneoftheabove.

ANSWER: c

58.WhatstatementisnottruewithrespecttoTemporaryRegulations?

a.Maynotbecitedasprecedent.

b.IssuedasProposedRegulations.

c.Automaticallyexpirewithinthreeyearsafterthedateofissuance.

d.FoundintheFederalRegister.

e.Alloftheabovestatementsaretrue.

ANSWER: a

59.Whatadministrativereleasedealswithaproposedtransactionratherthanacompletedtransaction?

a.LetterRuling.

b.TechnicalAdviceMemorandum.

c.DeterminationLetter.

d.FieldServiceAdvice.

e.Noneoftheabove.

ANSWER: a

60.Whichofthefollowingindicatesthatadecisionhasprecedentialvalueforfuturecases?

a.Staredecisis.

b.Golsendoctrine.

c.Enbanc.

d.Reenactmentdoctrine.

e.Noneoftheabove.

ANSWER: a

61.AtaxpayerwholosesinaU.S.DistrictCourtmayappealdirectlytothe:

a.U.S.SupremeCourt.

b.U.S.TaxCourt.

c.U.S.CourtofFederalClaims.

d.U.S.CircuitCourtofAppeals.

e.Alloftheabove.

ANSWER:d

RATIONALE:AppealsfromaU.S.DistrictCourtgotothetaxpayer’shomecircuitoftheU.S.CircuitCourtofAppeals.

62.Ifataxpayerdecidesnottopayataxdeficiency,heorshemustgotowhichcourt?

a.AppropriateU.S.CircuitCourtofAppeals.

b.U.S.DistrictCourt.

c.U.S.TaxCourt.

d.U.S.CourtofFederalClaims.

e.Noneoftheabove.

ANSWER: c

63.Ajurytrialisavailableinthefollowingtrialcourt:

a.U.S.TaxCourt.

b.U.S.CourtofFederalClaims.

c.U.S.DistrictCourt.

d.U.S.CircuitCourtofAppeals.

e.Noneoftheabove.

ANSWER: c

64.Ataxpayermaynotappealacasefromwhichcourt:

a.U.S.DistrictCourt.

b.U.S.CircuitCourtofAppeals.

c.U.S.CourtofFederalClaims.

d.SmallCaseDivisionoftheU.S.TaxCourt.

e.Noneoftheabove.

ANSWER: d

65.TheIRSwillnotacquiescetothefollowingtaxdecisions:

a.U.S.DistrictCourt.

b.U.S.TaxCourt.

c.U.S.CourtofFederalClaims.

d.SmallCaseDivisionoftheU.S.TaxCourt.

e.Alloftheabove.

ANSWER: d

66.WhichpublisherofferstheStandardFederalTaxReporter?

a.ResearchInstituteofAmerica.

b.CommerceClearingHouse.

c.Prentice-Hall.

d.LexisNexis.

e.Noneoftheabove.

ANSWER: b

67.Whichispresentlynotamajortaxservice?

a.StandardFederalTaxReporter.

b.FederalTaxes.

c.UnitedStatesTaxReporter.

d.TaxManagementPortfolios.

e.Alloftheabovearemajortaxservices.

ANSWER: b

68.WhichpublisherofferstheUnitedStatesTaxReporter?

a.ResearchInstituteofAmerica.

b.CommerceClearingHouse.

c.LexisNexis.

d.TaxAnalysts.

e.Noneoftheabove.

ANSWER: a

69.Whensearchingonanonlinetaxservice,whichapproachismorefrequentlyused?

a.Codesectionapproach.

b.Keywordapproach.

c.Tableofcontentsapproach.

d.Index.

e.Allareaboutthesame.

ANSWER: b

70.Aresearchercanfindtaxinformationonhomepagesitesof:

a.Governmentalbodies.

b.Taxacademics.

c.Publishers.

d.CPAfirms.

e.Alloftheabove.

ANSWER: e

71.Taxresearchinvolveswhichofthefollowingprocedures:

a.Identifyingandrefiningtheproblem.

b.Locatingtheappropriatetaxlawsources.

c.Assessingthevalidityofthetaxlawsources.

d.Follow-up.

e.Alloftheabove.

ANSWER: e

72.Whichtax-relatedwebsiteprobablygivesthebestpolicy-orientationresults?

a.taxalmanac.org.

b.irs.gov.

c.taxsites.com.

d.taxanalysts.com.

e.ustaxcourt.gov.

ANSWER: d

73.Whichcourtdecisionwouldprobablycarrymoreweight?

a.RegularU.S.TaxCourtdecision.

b.ReviewedU.S.TaxCourtdecision.

c.U.S.DistrictCourtdecision.

d.TaxCourtMemorandumdecision.

e.U.S.CourtofFederalClaims.

ANSWER: b

74.WhichRegulationshavetheforceandeffectoflaw?

a.ProceduralRegulations.

b.FinalizedRegulations.

c.LegislativeRegulations.

d.InterpretiveRegulations.

e.Alloftheabove.

ANSWER: c

75.WhichitemstelltaxpayerstheIRS’sreactiontocertaincourtdecisions?

a.Notices.

b.RevenueProcedures.

c.RevenueRulings.

d.ActionsonDecisions.

e.LegislativeRegulations.

ANSWER: d

76.Whichcourtdecisioncarriesmoreweight?

a.FederalDistrictCourt.

b.SecondCircuitCourtofAppeals.

c.U.S.TaxCourtdecision.

d.SmallCasesDivisionofU.S.TaxCourt.

e.U.S.CourtofFederalClaims.

ANSWER: b

77.Whichcompanydoesnotpublishcitatorsfortaxpurposes?

a.JohnWileySons.

b.CommerceClearingHouse.

c.ResearchInstituteofAmerica.

d.Westlaw.

e.Shepard’s.

ANSWER: a

78.Whichisnotaprimarysourceoftaxlaw?

a.Notice89-99,1989-2C.B.422.

b.EstateofHarryHolmesv.Comm.,326U.S.480(1946).

c.Rev.Rul.79-353,1979-2C.B.325.

d.Prop.Reg.§1.752­4T(f).

e.Alloftheaboveareprimarysources.

ANSWER: d

79.WhichstatementisincorrectwithrespecttotaxationontheCPAexam?

a.TheCPAexamnowhasonlyfourparts.

b.Therearenolongercasestudiesontheexam.

c.Acandidatemaynotgobackafterexitingatestlet.

d.Simulationsincludeafour-functionpop-upcalculator.

e.Noneoftheaboveareincorrect.

ANSWER: b

80.HowcanCongressionalCommitteeReportsbeusedbyataxresearcher?

ANSWER: CongressionalCommitteeReportsoftenexplaintheprovisionsofproposedlegislationandareavaluablesourceofascertainingtheintentofCongress.TheintentofCongressisthekeytointerpretingnewlegislationbytaxpayers,especiallybeforeRegulationsarepublished.

81.WhatareTreasuryDepartmentRegulations?

ANSWER: RegulationsareissuedbytheU.S.TreasuryDepartmentunderauthoritygrantedbyCongress.

Interpretivebynature,theyprovidetaxpayerswithconsiderableguidanceonthemeaningandapplicationoftheCode.Regulationsmaybeissuedinproposed,temporary,orfinalform.Regulationscarryconsiderableauthorityastheofficialinterpretationoftaxstatutes.Theyareanimportantfactortoconsiderincomplyingwiththetaxlaw.CourtsgenerallyignoreProposedRegulations.

82.CompareRevenueRulingswithRevenueProcedures.

ANSWER: RevenueRulingsareofficialpronouncementsoftheNationalOfficeoftheIRS.TheytypicallyprovideoneormoreexamplesofhowtheIRSwouldapplyalawtospecificfactsituations.LikeRegulations,RevenueRulingsaredesignedtoprovideinterpretationofthetaxlaw.However,theydonotcarrythesamelegalforceandeffectasRegulationsandusuallydealwithmorerestrictedproblems.RegulationsareapprovedbytheSecretaryoftheTreasury,whereasRevenueRulingsgenerallyarenot.

RevenueProceduresareissuedinthesamemannerasRevenueRulings,butdealwiththeinternalmanagementpracticesandproceduresoftheIRS.FamiliaritywiththeseprocedurescanincreasetaxpayercomplianceandhelptheIRSadministerthetaxlawsmoreefficiently.Ataxpayer’sfailuretofollowaRevenueProcedurecanresultinunnecessarydelayor,inadiscretionarysituation,cancausetheIRStodeclinetoactonbehalfofthetaxpayer.

83.WhatisaTechnicalAdviceMemorandum?

ANSWER: TheNationalOfficeoftheIRSreleasesTechnicalAdviceMemoranda(TAMs)weekly.TAMsresembleletterrulingsinthattheygivetheIRS’sdeterminationofanissue.However,theydifferinseveralrespects.Letterrulingsdealwithproposedtransactionsandareissuedtotaxpayersattheirrequest.Incontrast,TAMsdealwithcompletedtransactions.Furthermore,TAMsarisefromquestionsraisedbyIRSpersonnelduringauditsandareissuedbytheNationalOfficeoftheIRStoitsfieldpersonnel.TAMsareoftenrequestedforquestionsrelatingtoexemptorganizationsandemployeeplans.TAMsarenotofficiallypublishedandmaynotbecitedorusedasprecedent.

84.DiscusstheadvantagesanddisadvantagesoftheSmallCasesDivisionoftheU.S.TaxCourt.

ANSWER: ThereisnoappealfromtheSmallCasesDivision.ThejurisdictionoftheSmallCasesDivisionislimitedtocasesinvolvingamountsof$50,000orless.TheproceedingsoftheSmallCasesDivisionareinformal(e.g.,nonecessityforthetaxpayertoberepresentedbyalawyerorothertaxadviser).SpecialtrialjudgesratherthanTaxCourtjudgespresideovertheseproceedings.ThedecisionsoftheSmallCasesDivisionarenotprecedentsforanyothercourtdecisionandarenotreviewablebyanyhighercourt.ProceedingscanbemoretimelyandlessexpensiveintheSmallCasesDivision.SomeofthesecasescannowbefoundontheU.S.TaxCourtInternetWebsite.

85.DistinguishbetweenthejurisdictionoftheU.S.TaxCourtandaU.S.DistrictCourt.

ANSWER: TheU.S.TaxCourthearsonlytaxcasesandisthemostpopulartaxforum.TheU.S.DistrictCourthearsawidevarietyofnontaxcases,includingdrugcrimesandotherFederalviolations,aswellastaxcases.SomeTaxCourtjusticeshavebeenappointedfromIRSorTreasuryDepartmentpositions.Forthesereasons,somepeoplesuggestthattheU.S.TaxCourthasmoreexpertiseintaxmatters.

86.Howdotreatiesfitwithintaxsources?

ANSWER: TheU.Ssignscertaintaxtreaties(sometimescalledtaxconventions)withforeigncountriestorendermutualassistanceintaxenforcementandtoavoiddoubletaxation.Taxlegislationenactedin1988providedthatneitherataxlawnorataxtreatytakesgeneralprecedence.Thus,whenthereisadirectconflictwiththeCodeandatreaty,themostrecentitemwilltakeprecedence.Ataxpayermustdiscloseonthetaxreturnanypositionwhereatreatyoverridesataxlaw.Thereisa$1,000penaltyperfailuretodiscloseforindividualsanda$10,000perfailurepenaltyforcorporations.

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.