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.
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