Taxation of Individuals Chapter Exam Questions
Course Introduction
Taxation of Individuals covers the fundamental principles and applications of federal income tax laws as they pertain to individuals. The course examines the concepts of gross income, exclusions, deductions, credits, and filing requirements, while introducing students to the tax implications of various life events such as employment, business activities, property transactions, and investments. Learners explore tax planning strategies, compliance obligations, and key ethical considerations. The curriculum emphasizes practical problem-solving through case studies and the preparation of individual tax returns, equipping students with analytical skills necessary for effective decision-making and regulatory adherence in personal tax matters.
Recommended Textbook
Federal Tax Research 11th Edition by Roby B. Sawyers
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Chapter 1: Introduction to Tax Practice and Ethics
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Q1) Which of the following statements best explains the need for tax practitioners to understand nonregulatory ethical models of behavior?
A)Competing ethical solutions must be resolved by the courts.
B)There is more to ethical behavior than just following the rules of professional organizations.
C)Practitioners must always choose the action with the greatest benefit for their client.
D)Ethical choices are clearly spelled out by IRS regulations.
Answer: B
Q2) Tax planning has a higher likelihood of success when a tax practitioner is dealing with an open transaction instead of a closed transaction.
A)True
B)False
Answer: True
Q3) Enrolled actuaries are allowed to practice before the IRS.
A)True
B)False
Answer: True
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Chapter 2: Tax Research Methodology
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Q1) The distinction between primary and secondary authority is important for which of the following reasons?
A)to meet the accuracy threshold of "substantial authority"
B)to avoid penalties under Section 6662 of the Code
C)to search properly with connectors and wildcards
D)to meet the accuracy threshold of "substantial authority" and to avoid penalties under Section 6662 of the Code
Answer: D
Q2) Secondary sources are useful when:
A)conflicting primary authority exists
B)the issue is a closed-fact problem
C)a researcher does not have access to primary sources
D)a researcher disagrees with the client
Answer: A
Q3) Skilled tax research requires a combination of reasoning and creativity.
A)True
B)False
Answer: True
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4
Chapter 3: Constitutional and Legislative Sources
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Q1) What information is included in the history of a Code section?
Answer: The history of a Code section includes a list of Public Laws that have altered or amended the section. This listing generally includes a reference to the section as it existed prior to amendment as well as the effective date of the amendment to the law.
Q2) Taxpayers who file frivolous returns are subject to a $25,000 fine.
A)True
B)False
Answer: False
Q3) The Joint Conference Committee is called on to resolve differences between the House Ways and Means Committee version and the full House version of tax legislation.
A)True
B)False
Answer: False
Q4) The 16th Amendment to the U.S. Constitution authorized the imposition of a Federal income tax.
A)True
B)False
Answer: True
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Chapter 4: Administrative Regulations and Rulings
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Q1) Temporary Regulations must be followed by taxpayers until they are superseded or until they expire.
A)True
B)False
Q2) Which of the following statements is INCORRECT with regard to IRS Revenue Rulings?
A)Revenue Rulings apply the Code and Regulations to a specific factual situation.
B)Revenue Rulings are published chiefly to give guidance to taxpayers.
C)A Revenue Ruling is an official pronouncement of Congress.
D)All of these are correct.
Q3) Describe the Internal Revenue Bulletin and identify the types of documents published in the Bulletin. Explain when it is published and the citations used to reference the Bulletin.
Q4) Determination Letters are:
A)issued by the National Office of the IRS on proposed transactions
B)issued by a local IRS office, usually on completed transactions
C)published first in the Internal Revenue Bulletin
D)issued to IRS field agents as audit guidance
Q5) Define General and Legislative Regulations and explain the distinction.
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Chapter 5: Judicial Interpretations
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Q1) Tax Court Summary Opinions are published in a printed reporter by the Government Printing Office (GPO).
A)True
B)False
Q2) Which of the following statements is INCORRECT regarding headnotes and case briefs?
A)Headnotes are usually inserted at the beginnig of a case by the court reporter editors.
B)Headnotes help researchers quickly determine if a case is relevant.
C)Case briefs are a summary of a case identifying the facts, issue, holding and analysis.
D)All of the above statements are correct.
Q3) When a Tax Court decision is said to be entered under Rule 155, it means:
A)the Court computed the refund due the taxpayer
B)the Court reaches a decision without calculating the tax
C)the Court must follow the Court of Appeals that has direct jurisdiction over the taxpayer
D)the case cannot be appealed
Q4) Why would a taxpayer want to bring a case in the U.S. Court of Federal Claims?
Q5) Briefly explain how the burden of proof concept is applied.
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Chapter 6: Tax Services Ria Checkpoint
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Q1) Which service of Checkpoint is an annotated tax service?
A)Standard Federal Income Tax Reporter
B)USTR
C)Tax Research Consultant
D)Federal Tax Coordinator
Q2) Thomson Reuters Checkpoint will NOT automatically use its Thesaurus and look for synonyms when you put in a search query.
A)True
B)False
Q3) Which of the following statements best describes Checkpoint?
A)It has little value to accounting professionals.
B)It organizes information by database.
C)It has a limited database of cases.
D)None of these statements accurately describe Checkpoint.
Q4) Boolean connectors are used:
A)when the researcher is unsure as to which keywords would be most effective in a search
B)to define the relationship between keywords
C)in intuitive searches
D)none of these are correct
Page 8
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Chapter 7: Tax Services CCH Intelliconnect
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Q1) Which of the following statements is CORRECT regarding the CCH Citator?
A)The CCH Citator lists paragraph references where a case is examined in its Standard Federal Income Tax Reporter.
B)Only selected cases which the editors have determined most affect a case's precedential value are included in the citator listing.
C)The CCH Citator uses a general, not a local citation for citing cases.
D)All of these are correct.
Q2) What is the starting point in approaching any tax research problem?
A)Form a conclusion.
B)Interpret editorial data.
C)Identify issues associated with the questions.
D)Access IntelliConnect.
Q3) What is one of the advantages of using CCH IntelliConnect?
A)IntelliConnect has to be shut down every time it is not in use.
B)Researchers can start searching effectively with little training.
C)It allows opening up to three searches simultaneously.
D)Its library is available using a few screens.
Q4) Identify the different types of tax periodicals. Explain how tax periodicals are used in tax research and why they are valuable to a tax researcher.
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Chapter 8: Tax Services Specialty and Others
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Q1) The more than 500 BNA Portfolios are classified into five series: Federal, International, State, Accounting, and:
A)Citations
B)Regulations
C)Municipal
D)Estate
Q2) Most search indexes and databases such as Google Scholar, JSTOR, Business Source Premier, Thomson Reuters Web of Science, and ABI/Inform, facilitate the locating of relevant tax articles by focusing on a guided search strategy.
A)True
B)False
Q3) Perhaps the only tax services not available on LexisNexis are its competitors Checkpoint and Westlaw.
A)True
B)False
Q4) Why might some researchers find the citators in Westlaw or Shepard's superior to those found in Checkpoint or IntelliConnect?
Q5) What are KeySearch and the West Key Number System?
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Chapter 9: Multijurisdictional and Other Research
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Q1) Generally, state constitutions limit the rates and types of taxes that can be imposed, and they require that tax laws show uniformity, provide equal protection, and have a:
A)good background
B)profitable end
C)public purpose
D)referendum
Q2) U.S. tax law uses a territorial approach for taxing non-U.S. taxpayers.
A)True
B)False
Q3) Bloomberg BNA's Premier International Tax Library includes:
A)an international create-a-chart feature
B)CCH's Tax Treaties Reporter
C)Tax Notes International
D)Tax Management Portfolios
Q4) Discuss in brief about some of the most useful resources offered within the CCH International Tax Service.
Q5) Why are taxpayers emphasizing multijurisdictional tax planning?
Q6) What is the International Bureau of Fiscal Documentation, and what is its mission?
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Chapter 10: Financial Accounting Research
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Q1) While browsing through Codification structure, all of the two-digit subtopics and three-digit intersection topics are displayed on the:
A)subsection page
B)general topic landing page
C)search screen
D)none of these are correct
Q2) A position taken in a previously filed return or expected to be taken in a future return is known as:
A)an audit position
B)a tax position
C)an uncertain tax position
D)none of these are correct
Q3) The main advantage of the FASB Codification is:
A)convergence of national accounting standards and IFRS
B)a shift from national accounting to international accounting
C)a move away from a standards-based model of organization to one based on topical area
D)all of these are correct
Q4) Explain the basic principles of accounting for deferred taxes.
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Chapter 11: Communicating Research Results
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Q1) Even if all of the judicial precedent supports a taxpayer's position, the court still may hold against the taxpayer.
A)True
B)False
Q2) To effectively convey the results of a tax research project, the practitioner must:
A)consult IRS officials
B)apply professional judgment and communication skills
C)have an informal discussion with the client
D)all of these are correct
Q3) By far the most common form of substantive communication between the tax professional and his or her client is a:
A)file memo
B)text message
C)tax-oriented blog
D)telephone call or e-mail
Q4) IRS agents are not bound by District Court decisions.
A)True
B)False
Q5) Identify five types of tax-related communications.
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Chapter 12: Tax Planning
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Q1) Taxpayers are rewarded more for finding ways to save taxes than for earning an equal amount in the marketplace.
A)True
B)False
Q2) Social Security Taxes are considered:
A)progressive
B)flat
C)regressive
D)proportional
Q3) The progressive nature of the tax system tends to increase the advantage of income splitting.
A)True
B)False
Q4) Identify the five goals of tax planning behavior and give an example of each.
Q5) The "Child Tax Credit" was created to prevent parents from sheltering income by putting accounts in the names of their lower-taxed children.
A)True
B)False
Q6) What is a statutory tax trap? Give an example.
Page 14
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Chapter 13: Working With the IRS
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Q1) What is the formula that assigns numeric weights to certain (undisclosed by the IRS) return items, generating a composite score for the return?
A)selection of returns formula
B)unallowable items formula
C)discriminant function formula (DIF)
D)mathematical errors formula
Q2) The National Research Program (NRP) provides statistics that are used in the development and update of the DIF formulas.
A)True
B)False
Q3) The Appeals Office has the exclusive and final authority to settle cases that originate in any district irrespective of its jurisdiction.
A)True
B)False
Q4) Under various provisions of the Internal Revenue Code, what are some of the various rights guaranteed to taxpayers?
Q5) What are the "pros" and "cons" of filing a protest to an IRS Audit?
Q6) Enumerate how the IRS conducts a field examination.
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Chapter 14: Tax Practice and Administration: Sanctions, Agreements, and Disclosures
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Q1) If a taxpayer understates gross income by 25 percent, the IRS has a 6-year statute of limitations on assessment.
A)True
B)False
Q2) To avoid the penalty, the ___________ must meet the burden of proof that the failure to file was the result of reasonable cause.
A)IRS
B)TRP
C)taxpayer
D)none of these are correct
Q3) A failure-to-pay penalty is imposed when the taxpayer fails to pay either a tax shown on his or her return or an assessed deficiency within 10 days of an IRS notice or demand.
A)True
B)False
Q4) Give an example of what it means for failure to make deposits of taxes. Describe the penalties involved.
Q5) "In case of both civil and criminal frauds, the burden of proof is on the IRS." Explain.
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