FEDERAL TAX RESEARCH UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPLETE STUDY GUIDE FULL
SOLUTION
●● Section 7805(a) of the IRC authorizes the IRS to perform what
activities?
Answer: Issue binding rules and regulations concerning Title 26 of the
U.S. Code and to interpret the tax code.
●● The IRS issues numerous pronouncements. Name the four that are
the most important in conducting federal tax research?
Answer: 1. Regulations
2. Revenue Rulings.
3. Revenue Procedures
4. Letter Rulings.
●● "A tax researcher should not ignore proposed regulations." Comment
on this statement.
Answer: Although a Proposed Regulation has not yet been incorporated
into the official administrative tax law, it should not be ignored because
many of the provisions of the Proposed Regulation may eventually
become part of the final regulation.
,●● Define and distinguish between general (interpretive) and legislative
regulations.
Answer: General regulations are issued under the general authority
granted to the IRS to interpret the language of the IRC. Legislative
regulations are issued under specify authority by Congress on a specific
law.
●● What are temporary regulations? What weight do they carry in the
tax researcher's analysis?
Answer: Temporary Regulations are issued to provide the taxpayer with
some immediate guidelines concerning a new provision of the law. Until
a Temporary Regulation is replaced with the Final Regulation, the tax
researcher should treat the Temporary Regulation as though it were
finalized and assign it the presumption of the force of law. Consequently,
it is important to distinguish between Temporary and Proposed
Regulations. Temporary Regulations are fully in effect and must be
followed until they are superseded, whereas Proposed Regulations are
not in effect and are issued to solicit comments and to expose the IRS's
proposed interpretation of the law.
●● In general, what is the effective date of a new regulation?
Answer: Under §7805(b), a Regulation is effective on the date on which
the Regulation was filed in the Federal Register. However, there are
several exceptions, which allow a new Regulation to apply retroactively
(see text).
, ●● Describe the structure of a typical revenue ruling?
Answer: A Revenue Ruling usually includes several features. Typically,
the Ruling begins with a statement of the issues that are involved. Then,
those facts that will bear upon the IRS's analysis and conclusion are
stated in summary fashion. In the Laws and Analysis section of the
Ruling, the Service identifies and discusses the applicable statutes,
Regulations, and court cases that relate to the factual situation. Finally,
the IRS holding is stated, usually accompanied by an explanation as to
how and why the IRS arrived at the conclusion to treat the transaction in
this matter.
●● What is a revenue ruling?
Answer: A Revenue Ruling is an official pronouncement of the National
Office of the IRS, and it deals with the application of the Code and
Regulations to a specific factual situation, which usually has been
submitted by a taxpayer. Consequently, most Revenue Rulings indicate
how the IRS will treat a given taxpayer's transaction.
●● What resources are available to help the tax researcher who wishes to
check the status of a revenue ruling?
Answer: Internal Revenue Bulletins and Tax research databases
●● Of what relevance to the tax practitioner is a revenue procedure?
Answer: Although a Revenue Procedure may not be useful in arriving at
a solution to a technical tax problem, such pronouncements are
important in that they provide information to the public as to the
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPLETE STUDY GUIDE FULL
SOLUTION
●● Section 7805(a) of the IRC authorizes the IRS to perform what
activities?
Answer: Issue binding rules and regulations concerning Title 26 of the
U.S. Code and to interpret the tax code.
●● The IRS issues numerous pronouncements. Name the four that are
the most important in conducting federal tax research?
Answer: 1. Regulations
2. Revenue Rulings.
3. Revenue Procedures
4. Letter Rulings.
●● "A tax researcher should not ignore proposed regulations." Comment
on this statement.
Answer: Although a Proposed Regulation has not yet been incorporated
into the official administrative tax law, it should not be ignored because
many of the provisions of the Proposed Regulation may eventually
become part of the final regulation.
,●● Define and distinguish between general (interpretive) and legislative
regulations.
Answer: General regulations are issued under the general authority
granted to the IRS to interpret the language of the IRC. Legislative
regulations are issued under specify authority by Congress on a specific
law.
●● What are temporary regulations? What weight do they carry in the
tax researcher's analysis?
Answer: Temporary Regulations are issued to provide the taxpayer with
some immediate guidelines concerning a new provision of the law. Until
a Temporary Regulation is replaced with the Final Regulation, the tax
researcher should treat the Temporary Regulation as though it were
finalized and assign it the presumption of the force of law. Consequently,
it is important to distinguish between Temporary and Proposed
Regulations. Temporary Regulations are fully in effect and must be
followed until they are superseded, whereas Proposed Regulations are
not in effect and are issued to solicit comments and to expose the IRS's
proposed interpretation of the law.
●● In general, what is the effective date of a new regulation?
Answer: Under §7805(b), a Regulation is effective on the date on which
the Regulation was filed in the Federal Register. However, there are
several exceptions, which allow a new Regulation to apply retroactively
(see text).
, ●● Describe the structure of a typical revenue ruling?
Answer: A Revenue Ruling usually includes several features. Typically,
the Ruling begins with a statement of the issues that are involved. Then,
those facts that will bear upon the IRS's analysis and conclusion are
stated in summary fashion. In the Laws and Analysis section of the
Ruling, the Service identifies and discusses the applicable statutes,
Regulations, and court cases that relate to the factual situation. Finally,
the IRS holding is stated, usually accompanied by an explanation as to
how and why the IRS arrived at the conclusion to treat the transaction in
this matter.
●● What is a revenue ruling?
Answer: A Revenue Ruling is an official pronouncement of the National
Office of the IRS, and it deals with the application of the Code and
Regulations to a specific factual situation, which usually has been
submitted by a taxpayer. Consequently, most Revenue Rulings indicate
how the IRS will treat a given taxpayer's transaction.
●● What resources are available to help the tax researcher who wishes to
check the status of a revenue ruling?
Answer: Internal Revenue Bulletins and Tax research databases
●● Of what relevance to the tax practitioner is a revenue procedure?
Answer: Although a Revenue Procedure may not be useful in arriving at
a solution to a technical tax problem, such pronouncements are
important in that they provide information to the public as to the
