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Income Tax Fundamentals 2023 41st Edition TEST BANK by Gerald E. Whittenburg, Steven Gill
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Income Tax Fundamentals 2023 41st Edition TEST BANK by Gerald E. Whittenburg, Steven Gill
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TEST BANK for Income Tax Fundamentals 2024, 42nd Edition by Gerald Whittenburg; ISBN: 9780357900932, All 12 Chapters Covered, Verified Latest Edition
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Income Tax Fundamentals 2023 41st Edition TEST BANK by Gerald E. Whittenburg, Steven Gill
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Income Tax Fundamentals 2023 41st Edition TEST BANK by Gerald E. Whittenburg, Steven Gill
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Income Tax Fundamentals 2023 41st Edition TEST BANKby Gerald E. Whittenburg, Steven Gill
what is the purpose of the joint conference committee? - ANSWER:the joint
conference committee, composed of ranking members of the house ways and means
committee (7 members) and the senate finance committee (5 members), is
responsible for the resolution of any differences between the house and senate
versions of a tax bill after passage
the legislative process of a tax bill begins with the - ANSWER:house ways and means
committee
exam
the 16th amendment granted congress the right to - ANSWER:tax income from
whatever source derived
exam
the value-added tax has great appeal to politicians because - ANSWER:it has the
potential to raise large sums of money
an attractive characteristic of the personal income tax is - ANSWER:it has the ability
to raise a considerable amount of money
exam
the tax reform act of 1986 - ANSWER:replaced the internal revenue code of 1954
with the internal revenue code of 1986
because many new things were added while old stuff were removed and they
completely changed the name of the code
exam
the tax cuts and jobs act did all of the following except - ANSWER:create a
homebuyers credit
exam
when approving a tax bill and there are differences between the house and senate
versions, the differences are resolved by the - ANSWER:joint conference committee
,exam
net capital gains are - ANSWER:taxed at a maximum rate of 20%
the American taxpayer relief act of 2012 did all of the following except -
ANSWER:sunset the Bush-era tax cuts
which item listed below is not a capital asset - ANSWER:depreciable property
not pleasure automobile since those can have significant appreciated value (e.g.
vintage cars)
exam
major features of conduits are - ANSWER:pass through their income to owners
need not pay taxes
based upon the organization of the internal revenue code what general topic would
be covered in Code sec. 731 - ANSWER:partners and partnerships
which of the following is published in the Federal Register? - ANSWER:treasury
regulations
to read an IRS revenue ruling that was issued within the past week which source
should be used? - ANSWER:internal revenue bulletin
which of the following publications includes the memorandum decisions of the US
tax court? - ANSWER:tax court memorandum decisions (TCM)
which of the following publications includes the regular decisions of the US tax
court? - ANSWER:US tax court reports
Mathew, a sole proprietor, employs Timothy as his full-time employee. Timothy's
2019 tax return is being audited by the IRS. Because of Timothy's high regard for
Mathew's knowledge and judgment, Timothy has asked Mathew to represent him in
the audit. May Mathew represent Timothy? - ANSWER:Attorneys or certified public
accountants who are not under suspension or disbarment may practice before the
IRS as may any person enrolled as an agent. Thus, if Mathew is an attorney or CPA,
he may represent Timothy as well as if he has become an enrolled agent by taking a
written examination administered by the IRS. If Mathew was related to Timothy, he
could represent him without enrollment
Marvin filed his 2018 tax return on August 15, 2019, having obtained an automatic
extension of time to file. However, not having the money to pay the tax bill at the
time, he arranged with the IRS to pay his tax liability 6 months later. on February 15,
,2020, Marvin paid the tax. Subsequently on November 13, 2020 he discovered a
deduction that he neglected to take on his 2018 return and he wishes to file a claim
for a refund. May he do so? - ANSWER:Yes, Marvin should file a claim for refund by
filing form 1040X (amended US individual income tax return) and mail it to the IRS
center where he filed the original return
a claim for refund must be filed within 3 years from the date the return was filed or
within 2 years from the date the tax was paid, whichever is later
therefore, since he filed the return on August 15, 2019, and paid the tax on February
15, 2020 he must file the claim by August 15, 2022
Your client, Steve, is an engineer whose income has doubled over the past 4 years.
he feels that by incorporating he could reduce his tax significantly. however, he can
demonstrate no business purpose for incorporating as he is employed by an
international oil company and he does no outside work. he asks you to request a
ruling from the IRS regarding his proposed incorporation. would you request a ruling
for him? - ANSWER:no, because the IRS will not issue a ruling in a number of general
areas, one of which applies here
the IRS will not issue a ruling on the results of a transaction that lacks bona fide
business purposes or has as its principle purpose the reduction of federal taxes
as Steve's principal purpose for wanting to incorporate is the reduction of taxes and
the transaction also lacks business purpose, he would not receive a ruling from the
IRS
Ron mailed his 2019 federal tax return on April 15, 2020 attaching only a first-class
postage stamp. however, the postage should have been higher since the return
weighed 3 ounces. his return is sent back to him on April 22, 2020, at which time he
pays the additional postage. will Ron be required to pay a delinquency penalty? -
ANSWER:no, because the penalty can be avoided if the taxpayer can show that
failure to file and/or pay was due to reasonable cause and not to willful neglect
the internal revenue manual states that if a return is mailed on time but returned for
insufficient postage, the reasonable cause requirement for avoiding the penalty is
met
Karen engaged Joe, a CPA to prepare her tax return. Karen received a refund check
of $300 from the IRS. she endorsed the check and mailed it to Joe as payment for the
preparation of her return. Joe took the check to his bank and deposited the amount
in his bank account. describe the possible consequences of this situation -
ANSWER:Joe is subject to a preparer penalty
any preparer who endorses or otherwise negotiates a refund check issued to a
taxpayer for a return or claim for refund prepared by the preparer is liable for a
penalty of $500 (as adjusted for inflation) with respect to such check
, thus, Joe is potentially liable for a penalty of $500 (as adjusted for inflation) as a
result of his depositing Karen's refund check into his account in payment for his
services
Jim, a retail merchant, reported the following on his 2019 return
sales: $200,000
less cost of goods sold: $80,000
gross profit: $120,000
what amount must be omitted from income for the 6 year SOL to apply? -
ANSWER:Jim must omit more than $50,000 ($200,000 x 25%) for the 6 year SOL to
apply
if the taxpayer omits income in excess of 25% of the gross income reported on his
return, the IRS has 6 years in which to make any additional assessment of tax. IRC
sec. 6501(e)(1)
in computing gross income, revenues from the sales of goods or services are not to
be reduced by costs of goods sold. IRC sec. 6501(e)(1)(B)
Andrea, a CPA, is representing her client, Rodney, in an administrative proceeding. in
the course of this engagement, she discovers an error in the return that may result in
a material understatement of tax liability
what, if anything, should Andrea do with regard to this discovery? - ANSWER:per
"statement on standards for tax services" Andrea should ask Rodney to disclose the
error to the IRS. if Rodney does not comply with her request, Andrea may have a
duty to withdraw from the engagement. since the statements indicate standards
followed by members of the accounting profession, a violation of them might mean
that "due care" has not been exercised. thus, if Rodney does not comply with
Andrea's request and she does not withdraw from the engagement, she may be
subject to charges of negligence
Mary, a CPA, prepared Gordon's tax return for the current year. in preparing his
return, she took a deduction that is contrary to the Code. she feels that he is entitled
to this deduction because of her belief that possible conflicts of interest exist
between the 2 sections of the internal revenue code. is Mary in conflict with the
AICPA "standards on responsibilities in tax practice"? - ANSWER:no, per the AICPA,
"statements on standards for tax services." in preparing a tax return, a CPA may take
a position contrary to treasury department or IRS interpretations of the code
without disclosure if there is reasonable support for the position
an individual files an income tax return for the calendar-year 2019 on September 20,
2020, and pays $1,200, which is the balance of the tax due. disregarding interest,
how much in delinquency penalties would he have to pay? - ANSWER:(1): failure to
pay penalty:
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