FEDERAL TAX RESEARCH ACTUAL TEST
PAPER SOLVED QUESTIONS WITH
ACCURATE ANSWERS FULL PREP
PACKAGE
●● What are the three categories of tax practice?
Answer: Planning
Compliance
Litigation
●● What three ethical standards govern CPAs?
Answer: -Circular 230
-AICPA's Code of Professional Conduct
-Statements on Standards for Tax Services.
CPAs must also abide by the rules of the appropriate
state board(s) of accountancy.
●● What are the four steps of the tax research process?
Answer: Identification of pertinent issues
Determination of proper authorities
,Evaluation of appropriateness of authorities
Application of the authorities
●● A tax practitioner may not advise a client under Circular 230 to take
a position on a document, affidavit, or other paper submitted to the IRS
unless the position meets which standard under Circular 230, Section
10.34?
Answer: The position may not be frivolous
●● If a tax practitioner finds an error in a prior year's tax return, what
action (if any) must he or she take under Circular 230? What subpart and
section addresses this situation?
Answer: advise the client promptly of
the fact of such noncompliance, error, or omission
●● The term "practice before the IRS" includes the representation of
clients in the US Tax Court for cases being handled under the "small tax
case procedure" - True or False
Answer: False - practice before the IRS does not include representation
before the US Tax Court - only interactions concerning the taxpayer's
rights or liabilities are covered
●● What entails practice before the IRS?
, Answer: all matters connected with a presentation to the IRS or any of
its officers or employees relating to a taxpayer's rights, privileges, or
liabilities under laws or regulations administered by the IRS
●● What are the 4 best practices under Circular 230?
Answer: -communicating clearly with the client regarding terms of
engagement
-establishing the facts, determining which facts are relevant, evaluating
the reasonableness of assumptions and representations, relating
applicable law, and arriving at a conclusion
-advising the client regarding the importance of the conclusions reached
-acting fairly and with integrity in practice before the IRS
●● What are the SSTS? Who issues them?
What is their principle objective?
Answer: Statements on Standards for Tax Services - AICPA
Delineate a CPA's responsibilities to his or her clients, the public, the
government, and the profession
●● What threshold does SSTS No. 1 provide for a tax practitioner
regarding tax return positions? Could dis- closure of the position
influence that threshold?
Answer: -a good faith belief that a recommended position
has a realistic possibility of being sustained if challenged
PAPER SOLVED QUESTIONS WITH
ACCURATE ANSWERS FULL PREP
PACKAGE
●● What are the three categories of tax practice?
Answer: Planning
Compliance
Litigation
●● What three ethical standards govern CPAs?
Answer: -Circular 230
-AICPA's Code of Professional Conduct
-Statements on Standards for Tax Services.
CPAs must also abide by the rules of the appropriate
state board(s) of accountancy.
●● What are the four steps of the tax research process?
Answer: Identification of pertinent issues
Determination of proper authorities
,Evaluation of appropriateness of authorities
Application of the authorities
●● A tax practitioner may not advise a client under Circular 230 to take
a position on a document, affidavit, or other paper submitted to the IRS
unless the position meets which standard under Circular 230, Section
10.34?
Answer: The position may not be frivolous
●● If a tax practitioner finds an error in a prior year's tax return, what
action (if any) must he or she take under Circular 230? What subpart and
section addresses this situation?
Answer: advise the client promptly of
the fact of such noncompliance, error, or omission
●● The term "practice before the IRS" includes the representation of
clients in the US Tax Court for cases being handled under the "small tax
case procedure" - True or False
Answer: False - practice before the IRS does not include representation
before the US Tax Court - only interactions concerning the taxpayer's
rights or liabilities are covered
●● What entails practice before the IRS?
, Answer: all matters connected with a presentation to the IRS or any of
its officers or employees relating to a taxpayer's rights, privileges, or
liabilities under laws or regulations administered by the IRS
●● What are the 4 best practices under Circular 230?
Answer: -communicating clearly with the client regarding terms of
engagement
-establishing the facts, determining which facts are relevant, evaluating
the reasonableness of assumptions and representations, relating
applicable law, and arriving at a conclusion
-advising the client regarding the importance of the conclusions reached
-acting fairly and with integrity in practice before the IRS
●● What are the SSTS? Who issues them?
What is their principle objective?
Answer: Statements on Standards for Tax Services - AICPA
Delineate a CPA's responsibilities to his or her clients, the public, the
government, and the profession
●● What threshold does SSTS No. 1 provide for a tax practitioner
regarding tax return positions? Could dis- closure of the position
influence that threshold?
Answer: -a good faith belief that a recommended position
has a realistic possibility of being sustained if challenged
