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Chapter 1
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1. Tax compliance is the process of:
- filing necessary tax returns
- gathering the financial information necessary to report taxable income
- representing a taxpayer at an IRS audit
- all of these are correct
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 2:12 PM
2. Tax evasion is:
- a fraudulent act involving illegal nonpayment of taxes
- one of the objectives of tax planning
- an act of deferring tax payments to future periods
- the same as tax avoidance as both of them result in nonpayment of taxes
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
3. Tax litigation is a process of:
- participating in an administrative audit
- settling tax-related disputes in a court of law
- filing amended tax returns as prescribed by tax laws
- arranging a taxpayer’s affairs to minimize tax liabilities
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
- Regarding open transactions, which of the following statements is INCORRECT?
- The transaction is not yet completed.
- The practitioner can suggest changes to achieve a better tax result.
- A tax practitioner has some degree of control over the client’s tax liability.
- The practitioner can fix the problem by amending the client’s tax return.
(Federal Tax Research, 11e Roby Sawyers, William Raabe, Gerald Whittenburg, Steven Gill) (Solution Manual all Chapters) 1 / 4
Chapter 1
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ANSWER: d
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 3:15 PM
- Which of the following statements best describes Circular 230?
- Circular 230 has been adopted by the AICPA as its set of rules of practice for CPAs.
- Circular 230 is a set of Treasury Department ethical and legal standards for those engaging in practice before
- Circular 230 is a set of internal rules at the IRS designed to protect tax practitioners from unfair discipline by
- Circular 230 is a set of ethical rules for taxpayers.
the IRS.
the IRS.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
- Who can represent a taxpayer before the IRS Appeals Office under Circular 230?
- a CPA
- an officer of a corporation may represent the corporation
- an attorney
- all of these are correct
- both a CPA and an attorney
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 3:19 PM
7. In a closed transaction, the scope of tax planning is:
- more limited as compared to an open transaction
- limited by the IRS rules of practice
- limited to presenting the taxpayer’s facts to the government in the most favorable, legal manner
- more limited as compared to an open transaction and limited to presenting the taxpayer’s facts to the
government in the most favorable, legal manner
ANSWER: d 2 / 4
Chapter 1
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POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 3:21 PM
8. Circular 230 includes rules on all of the following topics EXCEPT:
- who is authorized to practice before the IRS
- standards for “covered opinions”
- compliance with state ethical requirements
- a set of best practices to guide practitioners
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
- Statements on Standards for Tax Services (SSTS) contain advisory guidelines for:
- CPAs
- enrolled agents
- attorneys
- IRS authorities
- all of these are correct
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 3:31 PM
10. An EA must renew his or her enrollment card on a:
- 5-year cycle
- 3-year cycle
- 2-year cycle
- Renewal is not required once an EA gets a card
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False 3 / 4
Chapter 1
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DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
- Under Section 10.3, Subpart A, of Circular 230, the following individuals may practice before the IRS EXCEPT:
- unenrolled agents
- enrolled agents
- enrolled actuaries
- enrolled retirement plan agents
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 2:00 PM
12. Due diligence, in essence, means a tax practitioner:
- must be efficient in performing his duties
- must give due respect to IRS officials
- should use reasonable effort to comply with the tax laws
- should charge reasonable fees for work performed for a client
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 3/30/2017 11:37 AM
13. A contingent fee is:
- always allowed by Circular 230
- a fee that is out of line with the value of the service provided
- a fee based on a percentage of a taxpayer’s refund on a tax return
- all of these are correct
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
DATE CREATED: 3/30/2017 11:37 AM
DATE MODIFIED: 4/20/2017 2:20 PM
14. According to Circular 230, the “best practices” rules are:
- mandatory for all tax practitioners
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