INTRODUCTION TO TAX PRACTICE AND
ETHICS EXAM /ACTUAL EXAM QUESTIONS
AND CORRECT ANSWERS (DETAILED AND
VERIFIED ANSWERS) GRADED A+ |
VERIFIED ANSWERS | LATEST VERSION
2025-2026
In a modern, industrial society, the tax system is derived from several
disciplines. Identify the disciplines that play this role in the United States.
Explain how each of them affects the U.S. tax system. - ANSWER-In the United
States, the tax system is an outgrowth of the following five disciplines: law,
accounting, economics, political science, and sociology. The environment for the
tax system is provided by the principles of economics, sociology, and political
science, while the legal and accounting fields are responsible for the system's
interpretation and application.
Each of these disciplines affects this country's tax system in a unique way.
Economists address such issues as how proposed tax legislation will affect the
rate of inflation or economic growth. Measurement of the social equity of a tax
and determining whether a tax system discriminates against certain taxpayers
are issues that are examined by sociologists and political scientists. Finally,
,attorneys are responsible for the interpretation of the taxation statutes, and
accountants ensure that these same statutes are applied consistently
The elements of tax practice fall into what major categories in addition to tax
research? - ANSWER-The other major categories of tax practice in addition to
tax research are as follows:
· Tax compliance
· Tax planning
· Tax litigation
What is tax compliance as practiced in the United States? Give several examples
of activities that can be classified as tax compliance. - ANSWER-Tax
compliance consists of gathering pertinent information, evaluating and
classifying that information, and filing any necessary tax returns. Compliance
also includes other functions necessary to satisfy governmental requirements,
such as representing a client during an Internal Revenue Service (IRS) audit.
Several groups of individuals do most of the tax compliance work in the United
States. Identify these groups and briefly describe the kind of work that each
group does. In this regard, be sure to define the term enrolled agent. -
ANSWER-Most of the tax compliance work is performed by commercial tax
preparers, enrolled agents (EAs), attorneys, and certified public accountants
, (CPAs). Noncomplex individual, partnership, and corporate tax returns often
are completed by commercial tax preparers. The preparation of more complex
returns usually is performed by EAs, attorneys, and CPAs. The latter groups
also provide tax planning services and represent their clients before the IRS.
An EA is one who is admitted to practice before the IRS by passing a special
IRS-administered examination, or who has worked for the IRS for five years
and is issued a permit to represent clients before the IRS. CPAs and attorneys
are not required to take this examination and are automatically admitted to
practice before the IRS if they are in good standing with the appropriate
professional licensing board.
What is tax planning? Explain the difference between tax evasion and tax
avoidance and the role of each in professional tax planning. - ANSWER-Tax
planning is the process of arranging one's financial affairs to minimize any tax
liability. Much of modern tax practice centers around this process, and the
resulting outcome is tax avoidance. There is nothing illegal or immoral in the
avoidance of taxation as long as the taxpayer remains within legal bounds. In
contrast, tax evasion constitutes the illegal nonpayment of a tax and cannot be
condoned. Activities of this sort clearly violate existing legal constraints and fall
outside of the domain of the professional tax practitioner.
Tax planning falls into two major categories: the "open" transaction and the
"closed" transaction. Discuss each type of transaction and describe how each
affects tax planning. - ANSWER-In an open tax planning situation, the
ETHICS EXAM /ACTUAL EXAM QUESTIONS
AND CORRECT ANSWERS (DETAILED AND
VERIFIED ANSWERS) GRADED A+ |
VERIFIED ANSWERS | LATEST VERSION
2025-2026
In a modern, industrial society, the tax system is derived from several
disciplines. Identify the disciplines that play this role in the United States.
Explain how each of them affects the U.S. tax system. - ANSWER-In the United
States, the tax system is an outgrowth of the following five disciplines: law,
accounting, economics, political science, and sociology. The environment for the
tax system is provided by the principles of economics, sociology, and political
science, while the legal and accounting fields are responsible for the system's
interpretation and application.
Each of these disciplines affects this country's tax system in a unique way.
Economists address such issues as how proposed tax legislation will affect the
rate of inflation or economic growth. Measurement of the social equity of a tax
and determining whether a tax system discriminates against certain taxpayers
are issues that are examined by sociologists and political scientists. Finally,
,attorneys are responsible for the interpretation of the taxation statutes, and
accountants ensure that these same statutes are applied consistently
The elements of tax practice fall into what major categories in addition to tax
research? - ANSWER-The other major categories of tax practice in addition to
tax research are as follows:
· Tax compliance
· Tax planning
· Tax litigation
What is tax compliance as practiced in the United States? Give several examples
of activities that can be classified as tax compliance. - ANSWER-Tax
compliance consists of gathering pertinent information, evaluating and
classifying that information, and filing any necessary tax returns. Compliance
also includes other functions necessary to satisfy governmental requirements,
such as representing a client during an Internal Revenue Service (IRS) audit.
Several groups of individuals do most of the tax compliance work in the United
States. Identify these groups and briefly describe the kind of work that each
group does. In this regard, be sure to define the term enrolled agent. -
ANSWER-Most of the tax compliance work is performed by commercial tax
preparers, enrolled agents (EAs), attorneys, and certified public accountants
, (CPAs). Noncomplex individual, partnership, and corporate tax returns often
are completed by commercial tax preparers. The preparation of more complex
returns usually is performed by EAs, attorneys, and CPAs. The latter groups
also provide tax planning services and represent their clients before the IRS.
An EA is one who is admitted to practice before the IRS by passing a special
IRS-administered examination, or who has worked for the IRS for five years
and is issued a permit to represent clients before the IRS. CPAs and attorneys
are not required to take this examination and are automatically admitted to
practice before the IRS if they are in good standing with the appropriate
professional licensing board.
What is tax planning? Explain the difference between tax evasion and tax
avoidance and the role of each in professional tax planning. - ANSWER-Tax
planning is the process of arranging one's financial affairs to minimize any tax
liability. Much of modern tax practice centers around this process, and the
resulting outcome is tax avoidance. There is nothing illegal or immoral in the
avoidance of taxation as long as the taxpayer remains within legal bounds. In
contrast, tax evasion constitutes the illegal nonpayment of a tax and cannot be
condoned. Activities of this sort clearly violate existing legal constraints and fall
outside of the domain of the professional tax practitioner.
Tax planning falls into two major categories: the "open" transaction and the
"closed" transaction. Discuss each type of transaction and describe how each
affects tax planning. - ANSWER-In an open tax planning situation, the
