Question One
Which of the following is not a characteristic around which tax planning is organized: Select one:
a. Jurisdictionb. Timingc. Entityd. Charactere. All of the above
Question 2
Which category of tax preparers may represent their clients in only the most limited situations in front of the IRS? Select one:
a. Enrolled Agentsb. Preparers enrolled only in the Annual Filing Season Programc. Attorneysd. CPAs
Question 3
Craig commits fraud on his tax return. It is found that he was $40,000 deficient in his tax because of the fraud. What would his penalty be? Select one:
a. $500b. $30,000c. $40,000d. $0
Question 4
If a taxpayer makes all of his income from his job and various investments, which office of the IRS would likely investigate his return if it were audited? Select one:
a. Wage & Investment Division (W&I)b. Large & Midsize Business Officec. Small Business Officed. Criminal Investigation Officee. None of the above offices would perform the audit
Question 5
Which of the following statements best describes the process of tax planning? Select one:
a. Tax planning is equivalent to tax evasion.b. Tax planning is the avoidance of "tax traps."c. Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability.d. Tax planning is the deferral of tax on income.e. Tax planning is the calculation of a taxpayer's marginal rate of tax.
Question 6
Patricia has taxable income of $40,000 on which she pays income tax of $5,856. If Patricia's taxable income increases by $2,000, she will pay an additional tax of $500. What is Patricia's marginal tax rate? Select one:
a. 15.00 percentb. 14.84 percentc. 15.32 percentd. 25.00 percente. None of the above
Question 7
Which of the following is not a type of IRS audit? Select one:
a. Office auditb. Field auditc. Correspondence auditd. Operational audite. All of the above are types of IRS audits
Question 8
Which of the following will not affect the statute of limitations on a tax return? Select one:
a. Omission of a significant amount of gross incomeb. Mutual consent of the IRS and the taxpayerc. Failure to pay the tax due with the tax returnd. Failure to file a tax returne. Filing a fraudulent tax return
Question 9
Which of the following types of audits was suspended due to protests from taxpayers and lawmakers? Select one:
a. Discriminant Function System selected auditb. Taxpayer Compliance Measurement Program selected auditc. Correspondence auditd. Office audite. None of the above
Question 10
If a calendar year taxpayer's 2015 individual income tax return is mailed on June 15, 2016, the statute of limitations would normally run out on: Select one:
a. June 15, 2018b. June 15, 2019c. April 15, 2018d. April 15, 2019e. None of the above