Questions from Federal Taxation

Q: Upon audit, the IRS determines Maria’s tax liability to be $

Upon audit, the IRS determines Maria’s tax liability to be $40,000. Maria agrees to pay a $7,000 deficiency. Will she necessarily have to pay a substantial understatement penalty? Explain.

Q: Distinguish between the circumstances that give rise to the civil fraud penalty

Distinguish between the circumstances that give rise to the civil fraud penalty and those that give rise to the negligence penalty.

Q: A trust instrument provides that, for life, Irene is entitled

A trust instrument provides that, for life, Irene is entitled to receive distributions of income only and Beth is to receive the remainder interest. The trust sells property at a gain. Income and corp...

Q: Explain why the government might bring criminal fraud charges against a taxpayer

Explain why the government might bring criminal fraud charges against a taxpayer under Sec. 7206 instead of Sec. 7201. Compare the maximum penalties imposed under Secs. 7201, 7203, and 7206.

Q: In general, when does the limitations period for tax returns expire

In general, when does the limitations period for tax returns expire? List four exceptions to the general rule.

Q: What is the principal purpose of the innocent spouse provisions?

What is the principal purpose of the innocent spouse provisions?

Q: List five IRC penalties that can be imposed on tax return preparers

List five IRC penalties that can be imposed on tax return preparers. Does the IRC require a CPA to verify the information a client furnishes?

Q: Under the AICPA’s Statements on Standards for Tax Services, what is

Under the AICPA’s Statements on Standards for Tax Services, what is the tax practitioner’s professional duty in each of the following situations? a. Client erroneously deducts $5,000 (instead of $500...

Q: a. Through what programs has the IRS gathered data to develop

a. Through what programs has the IRS gathered data to develop its DIF statistical models? b. How do these programs differ? c. How has the IRS used these programs to select returns for audit?

Q: The IRS informs Brad that it will audit his current year employee

The IRS informs Brad that it will audit his current year employee business expenses. Brad just met with a revenue agent who contends that Brad owes $775 of additional taxes. Discuss briefly the proced...