Exam Review TAX Questions with
complete solution
Tax compliance is the process of:
a. filing necessary tax returns
b. gathering the financial information necessary to report taxable income
c. representing a taxpayer at an IRS audit
d. all of the above - correct answer D
Tax evasion is:
a. a fraudulent act involving illegal nonpayment of taxes
b. one of the objectives of tax planning
c. an act of deferring tax payments to future periods
d. the same as tax avoidance as both of them result in nonpayment of taxes -
correct answer A
Tax litigation is a process of:
a. participating in an administrative audit
b. settling tax-related disputes in a court of law
c. filing amended tax returns as prescribed by tax laws
d. arranging a taxpayer's affairs to minimize tax liabilities - correct answer B
,Regarding open transactions, which of the following statements is
INCORRECT?
a. the transaction is not yet completed
b. the practitioner can suggest changes to achieve a better tax result
c. a tax practitioner has some degree of control over the client's tax liability
d. the practitioner can fix the problem by amending the client's tax return -
correct answer D
Which of the following statements best describes Circular 230?
a. Circular 230 has been adopted by the AICPA as its set of rules of practice
for CPAs.
b. Circular 230 is a set of Treasury Department ethical and legal standards for
those engaging in practice before the IRS.
c. Circular 230 is a set of internal rules at the IRS designed to protect tax
practitioners from unfair discipline by the IRS.
d. Circular 230 is a set of ethical rules for taxpayers. - correct answer B
Who can represent a taxpayer before the IRS Appeals Office under Circular
230?
a. A CPA
b. An officer of a corporation may represent the corporation
c. An attorney
d. All of the above
e. Only a and c - correct answer D
,In a closed transaction, the scope of tax planning is:
a. more limited as compared to an open transaction
b. limited by the IRS rules of practice
c. limited to presenting the taxpayer's facts to the government in the most
favorable, legal manner
d. Only a and c - correct answer D
Circular 230 includes rules on all of the following topics EXCEPT:
a. who is authorized to practice before the IRS
b. standards for "covered opinions"
c. compliance with state ethical requirements
d. a set of best practices to guide practitioners - correct answer C
Standards for Tax Services (SSTS) contain advisory guidelines for:
a. CPAs
b. enrolled agents
c. attorneys
d. IRS authorities
e. All of the above - correct answer A
An EA must renew his or her enrollment card on a:
a. 5-year cycle
, b. 3-year cycle
c. 2-year cycle
d. Renewal is not required once an EA gets a card - correct answer B
An unenrolled tax return preparer can make an appearance as the taxpayer's
representative only before the:
a. Examination Division of the IRS
b. Appeals and Collection Division of the IRS
c. SB/SE Division of the IRS
d. Criminal Investigation Division of the IRS - correct answer A
Due diligence, in essence, means a tax practitioner:
a. must be efficient in performing his duties
b. must give due respect to IRS officials
c. should use reasonable effort to comply with the tax laws
d. should charge reasonable fees for work performed for a client - correct
answer C
A contingent fee is:
a. always allowed by Circular 230
b. a fee that is out of line with the value of the service provided
c. a fee based on a percentage of a taxpayer's refund on a tax return
d. all of the above - correct answer C
complete solution
Tax compliance is the process of:
a. filing necessary tax returns
b. gathering the financial information necessary to report taxable income
c. representing a taxpayer at an IRS audit
d. all of the above - correct answer D
Tax evasion is:
a. a fraudulent act involving illegal nonpayment of taxes
b. one of the objectives of tax planning
c. an act of deferring tax payments to future periods
d. the same as tax avoidance as both of them result in nonpayment of taxes -
correct answer A
Tax litigation is a process of:
a. participating in an administrative audit
b. settling tax-related disputes in a court of law
c. filing amended tax returns as prescribed by tax laws
d. arranging a taxpayer's affairs to minimize tax liabilities - correct answer B
,Regarding open transactions, which of the following statements is
INCORRECT?
a. the transaction is not yet completed
b. the practitioner can suggest changes to achieve a better tax result
c. a tax practitioner has some degree of control over the client's tax liability
d. the practitioner can fix the problem by amending the client's tax return -
correct answer D
Which of the following statements best describes Circular 230?
a. Circular 230 has been adopted by the AICPA as its set of rules of practice
for CPAs.
b. Circular 230 is a set of Treasury Department ethical and legal standards for
those engaging in practice before the IRS.
c. Circular 230 is a set of internal rules at the IRS designed to protect tax
practitioners from unfair discipline by the IRS.
d. Circular 230 is a set of ethical rules for taxpayers. - correct answer B
Who can represent a taxpayer before the IRS Appeals Office under Circular
230?
a. A CPA
b. An officer of a corporation may represent the corporation
c. An attorney
d. All of the above
e. Only a and c - correct answer D
,In a closed transaction, the scope of tax planning is:
a. more limited as compared to an open transaction
b. limited by the IRS rules of practice
c. limited to presenting the taxpayer's facts to the government in the most
favorable, legal manner
d. Only a and c - correct answer D
Circular 230 includes rules on all of the following topics EXCEPT:
a. who is authorized to practice before the IRS
b. standards for "covered opinions"
c. compliance with state ethical requirements
d. a set of best practices to guide practitioners - correct answer C
Standards for Tax Services (SSTS) contain advisory guidelines for:
a. CPAs
b. enrolled agents
c. attorneys
d. IRS authorities
e. All of the above - correct answer A
An EA must renew his or her enrollment card on a:
a. 5-year cycle
, b. 3-year cycle
c. 2-year cycle
d. Renewal is not required once an EA gets a card - correct answer B
An unenrolled tax return preparer can make an appearance as the taxpayer's
representative only before the:
a. Examination Division of the IRS
b. Appeals and Collection Division of the IRS
c. SB/SE Division of the IRS
d. Criminal Investigation Division of the IRS - correct answer A
Due diligence, in essence, means a tax practitioner:
a. must be efficient in performing his duties
b. must give due respect to IRS officials
c. should use reasonable effort to comply with the tax laws
d. should charge reasonable fees for work performed for a client - correct
answer C
A contingent fee is:
a. always allowed by Circular 230
b. a fee that is out of line with the value of the service provided
c. a fee based on a percentage of a taxpayer's refund on a tax return
d. all of the above - correct answer C
