1. Which, if any, of the following statements is not accurate?
a. Every Code section has a treasury regulation.
b. The current Code is the 1986 Code, as amended.
c. Code sections inserted between consecutive existing section numbers are indicated by adding a capital letter to the Section number (for example Section 2032A).
d. None of the statements is accurate.
2. If any differences exist between the House of Representatives and the Senate passed versions of a tax bill, then
a. neither version of the tax bill can receive further consideration by Congress.
b. the House version is sent to the President since all tax legislation must originate in the House.
c. both versions of the tax bill are referred to the Joint Conference Committee
d. None of the statements is accurate.
3. Subtitle B of the Internal Revenue Code deals with what type of taxes and includes what section of the Internal Revenue Code?
a. Subtitle B deals with estate and gift taxes and includes Code Section 1015.
b. Subtitle B deals with business taxes and includes Code Section 351.
c. Subtitle B deals with estate and gift taxes and includes Code Section 2040.
d. Subtitle B deals with tax procedure, and includes Code Section 2518.
4 . Which of the following sections of the Internal Revenue Code deal with partnership taxation?
a. the 700s.
b. the 300s.
c. the 400s.
d. None of the above.
5. Bob contributed to AlphaBeta Partnership, a general partnership, a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for a 50 percent interest in the AlphaBeta Partnership. The AlphaBeta Partnership will assume the mortgage on the building. At the same time, Al contributed to AlphaBeta Partnership cash of $30,000 in exchange for the other 50 percent interest in the AlphaBeta Partnership. Which of the following Sections of the Code is relevant to the determination of whether or not Bob recognizes gain or loss on this transaction?
a. Only Code Section 722.
b. Only Code Sections 1 and 721(a).
c. Code Section 723 and Code Section 1001(a).
d. Code Section 1001(c) and Code Section 721(a).
6. Bob contributed to the AlphaBeta Partnership, a general partnership, a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for a 50 percent interest in the AlphaBeta Partnership. The AlphaBeta Partnership will assume the mortgage on the building. At the same time, Al contributed to AlphaBeta Partnership cash of $30,000 in exchange for the other 50 percent interest in the AlphaBeta Partnership. In addition to the section or sections that are relevant under question 5, above, which of the following Code Sections is or are also relevant to the determination of whether or not Bob recognizes any gain or loss on this transaction?
a. Only Code Section 751(b).
b. Only Code Sections 751(b), 733, and 705(a).
c. Code Sections 751(b), 733, 705(a) and 731(a).
d. None of the above.
7. Bob contributed to the AlphaBeta Partnership, a general partnership, a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for a 50 percent interest in the Alpha Partnership. Alpha will assume the mortgage on the building. At the same time, Al contributed to AlphaBeta Partnership cash of $30,000 in exchange for the other 50 percent interest in the AlphaBeta Partnership. Which of the following Code Sections is or are relevant to the determination of Bob's basis in his partnership interest upon completion of this transaction?
a. Only Code Section 722.
b. Only Code Section 1012(a).
c. Only Code Sections 1012(a) and 722.
d. Code Sections 1012(a), 722, and 705(a).
8. Al contributed to the AlphaBeta Partnership, a general partnership, cash of $30,000 in exchange for a 50 percent interest in the Alpha Partnership. At the same time, Bob contributed to the AlphaBeta Partnership a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for a 50 percent interest in the AlphaBeta Partnership. The AlphaBeta Partnership will assume the mortgage on the building. Which of the following Code Sections is or are relevant to the determination of whether or not Al recognizes gain or loss on this transaction?
a. Only Code Section 722.
b. Only Code Section 1001(c).
c. Code Section 723 and Code Section 1001(a).
d. Code Section 1001(c) and Code Section 721(a).
9. Al contributed to the AlphaBeta Partnership, a general partnership, cash of $30,000 in exchange for a 50 percent interest in the AlphaBeta Partnership. At the same time, Bob contributed to the AlphaBeta Partnership a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for a 50 percent interest in the AlphaBeta Partnership. The AlphaBeta Partnership will assume the mortgage on the building. Which of the following Code Sections is or are relevant to the determination of Bob's basis in his partnership interest upon completion of this transaction?
a. Only Code Section 722.
b. Only Code Section 1012(a).
c. Only Code Sections 1012(a) and 722.
d. Code Sections 1012(a), 722, and 752(a).
10. A taxpayer is considered to be at risk under the at risk rules for which of the following and under what section of the Code?
a. money borrowed by another for which payment is guaranteed by the taxpayer; Code Section 469(a).
b. money borrowed by the taxpayer from another who has an equity interest in the taxpayer's business; Code Section 61.
c. qualified nonrecourse financing; Code Section 469.
d. qualified nonrecourse financing; Code Section _____(if you conclude none of a, b, or c is correct, write in the citation for the correct section of the Internal Revenue Code, including the subsection and paragraph, if applicable).
11. Taxpayer owns a parcel of undeveloped real estate that has a basis to taxpayer of $200,000. Taxpayer purchased the real estate in 2003 for investment. Taxpayer sold the property to his nephew on January 10, 2017 for $80,000. Is the loss deductible by the taxpayer, and what Code sections are applicable to the transaction? Assume taxpayer has no other capital gains or losses for the year.
a. No amount of the loss is not deductible because the sale is to a related party; Code Section 1001(a) and Code Section 267(a) and (d).
b. The loss is deductible; Code Section 469(c)(7).
c. $3,000 of the loss is deductible in the current year; Code Sections 1001(a) and 1211(b).
d. None of the above answers is correct.
12. Bob contributed to AlphaBeta Corporation a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Al contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. Which of the following Code Sections is or are relevant to the determination of whether or not Bob recognizes gain or loss on this transaction?
a. Code Section 721.
b. Code Sections 1031 and 1001.
c. Only Code Section 1001.
d. Code Sections 351 and 1001.
13. Bob contributed to AlphaBeta Corporation a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Al contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. In addition to the section or sections that is or are relevant under question 12, above, which of the following Code Sections, if any, is also relevant to the determination of whether or not Bob recognizes any gain or loss on this transaction?
a. Only Code Section 752(b).
b. Code Section 362.
c. Code Section 357(c).
d. None of the above.
14. Bob contributed to AlphaBeta Corporation a building with an adjusted basis to Bob of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Al contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. Which of the following Code Sections is or are relevant to the determination of Bob's basis in his AlphaBeta Corporation stock as the result of this transaction?
a. Only Code Section 722.
b. Only Code Section 1012(a).
c. Code Sections 1012(a) and 358(a).
d. Code Sections 1012(a) and 362.
15. Code Section 162 relates to:
a. deductions in arriving at adjusted gross income.
b. expenses of carrying on a trade or business.
c. capital losses.
d. expenses related to investment property.
16. Which of the following statements is not accurate regarding effective dates in the Internal Revenue Code?
a. Sections of a new tax law may have different effective dates.
b. New provisions of the Internal Revenue Code do not always go into effect immediately upon signing of the law by the President.
c. Some effective dates can precede passage of the act.
d. All are accurate.
17. Subtitle A of the Internal Revenue Code deals with:
a. estate and gift taxes.
b. employment taxes.
c. income taxes.
d. excise taxes.
18. Intelliconnect provides access to the
a. Standard Federal Income Tax Reporter.
b. The U.S. Master Tax Guide.
c. The Treasury Regulations.
d. All of the above.
19. What areas of taxation are included in the Bloomberg BNA Portfolios?
a. Real estate taxation.
b. Estate and gift taxation.
c. Tax accounting.
d. Income tax deductions.
e. All of the above.
20. Which of the following sections is part of the current Internal Revenue Code of 1986?
a. Code Section 177.
b. Code Section 277.
c. Code Section 377.
d. Code Section 477.
21. Which of the following sections of the Internal Revenue Code of 1986 has been repealed?
a. Code Section 177.
b. Code Section 277.
c. Code Section 377.
d. Code Section 477.
22. Tax law primary authority includes the following:
a. The Internal Revenue Code, Tax Treaties, and Court Decisions.
b. The Code, the Regulations and CCH Tax Research Consultant.
c. The Code, Tax Journals and IRS Revenue Rulings.
d. None of the above.
23. In general, the answer to all tax questions or issues must be traced to:
a. a Supreme Court decision.
b. an IRS Letter Ruling.
c. a tax textbook.
d. the Internal Revenue Code.
24. Sources of tax authority which can be used to determine legislative intent, i.e., the reasons or purposes for enacting a particular rule of law, include:
a. the Internal Revenue Bulletin.
b. U.S. Statutes.
c. the House Ways and Means Committee Report.
d. None of the above.
25. Congressional bills which become law after negotiating their way through the legislative process become part of the U.S. Statutes and are codified in the Internal Revenue Code, also known as:
a. Title 28 of the U.S. Code.
b. Title 16 of the U.S. Code.
c. Title 62 of the U.S. Code.
d. Title 26 of the U.S. Code.
26. Transition rules, effective dates and sunset provisions are examples of enacted legislation:
a. which should be ignored in researching a tax question because they are not part of the Code.
b. which must be researched by referring to the Act in which the laws are contained, because they may not be included in the Code.
c. which are always included in the Internal Revenue Code.
d. None of the above.
27. Administrative sources of the tax law, such as IRS Regulations, Revenue Rulings and Revenue Procedures:
a. are generally drafted by the Supreme Court.
b. are official interpretations of the tax law made by the Department of the Treasury and the IRS.
c. do not have the force of law because they are the opinions of the Secretary of the Treasury.
d. All of the above.
28. Decisions of federal courts on cases and controversies involving the application or interpretation of tax law are known as:
a. judicial authority.
b. legislative authority.
c. administrative authority.
d. None of the above.
29. Post-1998 Temporary Regulations, which are often issued after-the-fact in response to a tax law change or an adverse judicial decision:
a. have the full force and effect of law while in existence.
b. are published simultaneously as Proposed Regulations.
c. lapse after three years if not finalized.
d. Two of the above.
e. All of the above.
30. A Private Letter Ruling:
a. is a District Director's response to a taxpayer's query regarding the tax consequences of a specific transaction or event.
b. is a response to a specific taxpayer's request for an official IRS interpretation of a tax law provision as applied to the taxpayer's given fact situation.
c. is issued in response to a question that arises during an audit.
d. None of the above.
31. The citation, Reg. §1.62-1T indicates:
a. that this is a final income tax regulation, involving Code Section 162.
b. that this is a temporary income tax regulation involving Code Sec. 62.
c. that this is a temporary estate tax regulation involving Code Sec. 62.
d. None of the above.
32. The following are trial courts from which a taxpayer may choose in initiating his or her tax lawsuit:
a. The Supreme Court.
b. The Tax Court.
c. The Court of Appeals for the 6th Circuit.
d. The Court of Federal Claims.
e. Two of the above.
33. The following characterize lawsuits which are heard in regular Tax Court:
a. The request for hearing must be filed with the Court within 120 days of receiving a statutory notice of deficiency.
b. The taxpayer must pay the deficiency up-front and sue for a refund.
c. A taxpayer's case may be heard by one judge or the entire panel en banc.
d. The taxpayer has a right to a jury trial.
34. A regular Tax Court case is appealed to:
a. the Court of Appeals for the Circuit in which the taxpayer resides.
b. the Court of Appeals for the Federal Circuit.
c. the Circuit Court of appeals with the most favorable precedent.
d. None of the above.
35. Pursuant to the Golsen Rule:
a. the Tax Court must follow all Circuit Court of Appeals decisions.
b. the Tax Court must follow decisions of the Court of Appeals for the Circuit in which the taxpayer's appeal may be filed.
c. the Tax Court must obtain a ruling from the Supreme Court of the state where the taxpayer resides if there is no Federal Circuit Court of Appeals decision on the matter.
d. Two of the above.
e. None of the above.
36. An example of a trial court of general jurisdiction that does not specialize in any particular type of law is:
a. the Tax Court.
b. Court of Appeals for the Federal Circuit.
c. the Supreme Court.
d. a United States District Court.
37. The following is true of a Circuit Court of Appeals:
a. The taxpayer who originated a claim in a U.S. District Court may appeal the decision to any Circuit Court of Appeals the taxpayer chooses.
b. The Court of Appeals may affirm the lower court decision, reverse the decision or retry the facts on appeal.
c. The Circuit Courts of Appeal follow stare decisis and are bound by their previous decisions, but they are not required to follow the decisions of other Circuits.
d. All of the above.
38. The United States Supreme Court will grant a writ of certiorari in a tax case if:
a. it involves tax issues of significant importance involving existing law, but which require interpretation.
b. it involves a provision of the of tax law which has been the subject of conflicting interpretation by the Circuit Courts of Appeal.
c. Both a and b.
d. Neither a nor b.
39. The citation, Kean v. Comm'r, 407 F.3d 186 (CA3, 2005), 2005-1 USTC ¶50,397, indicates that this case:
a. was officially reported in the 3rd volume of the Federal Reporter on Page 407.
b. was unofficially reported in CCH's United States Tax Cases in Volume 2005-1 at paragraph 50,397.
c. was officially reported in Volume 407 of the 3rd printing of the Federal Reporter on Page 186.
d. Both a and b.
e. Both b and c.
40. The process of analyzing the primary authority uncovered by tax research includes the following:
a. Reading only annotations and editorial information included in tax services.
b. Determining whether a primary authority is relevant, that is, sufficiently factually similar to the case of the taxpayer to be of use.
c. Determining if the primary authority found is still good law through the use of a Citator.
d. Both a and b.
e. Both b and c.