Federal Taxes Test 3 Question and
answers correctly solved
Which of the following satisfies the copy/list retention requirement for tax
preparers?
A. A card file with the AGI and tax due or refund for each return
prepared
B. A spreadsheet with the name and taxpayer identification number,
tax year of each taxpayer for whom a return was prepared, and the
type of return
C. An electronic copy of each Form 1040 prepared, without
additional schedules
D. A paper copy of each EIC checklist, EIC worksheet and record of
how EIC information was received and from whom - correct answer B
Which of the following people is a tax preparer?
A. A person who is compensated for using a computer to copy
handwritten information into a fillable IRS tax form.
B. A person who is compensated for using a computer to complete
Schedules A, B, and D for a 1040 filer.
C. A person who is compensated for using a computer to complete a
tax return for his regular employer.
D. A person who is compensated for using a computer to
electronically file a tax return that someone else prepared. - correct answer
B.
,Tax preparers must provide an identifying number on returns which they sign.
Which number is the generally accepted identifying number?
A. Social Security Number
B. EFIN
C. PTIN
D. EIN - correct answer C.
Pierre and Leo are very close friends, but Pierre is still paying Leo to prepare
his tax return. Because they're so close, Leo doesn't have to sign the tax
return to claim primary responsibility for the preparation.
True or False - correct answer False
Which of the following people is a tax preparer?
A. A British citizen who is compensated for preparing U.S. tax returns
in England for Americans who live in England.
B. A volunteer for VITA who only prepares tax returns for VITA clients.
C. An IRS employee who assists taxpayers complete returns during
an IRS open house.
D. All of the above - correct answer A
When must a tax preparer provide a taxpayer with a copy of the taxpayer's
return?
A. Upon request
B. Within 30 days of the filing of the return
C. No later than the time the return is presented for the taxpayer's
signature
D. No later than the time the return is filed with the IRS - correct answer C
,Philip prepared his client's taxes 2 years ago. He is now going to throw away
his copy of the tax return and the list with the name and taxpayer identification
number for whom the return was prepared. Since it has been 2 years, Philip is
complying with regulations.
True or False - correct answer False, it is 3 years
Kevin, a paid tax preparer, has not received his PTIN. Can Kevin use his
Social Security number instead?
A. Yes
B. Yes, but must amend the return with his PTIN when he receives it
C. Yes, if the return is for a family member
D. No - correct answer D
Shirley provided a copy of a tax return she prepared for her client but didn't
have the resources for her own copy. If she just has the name and taxpayer
identification number of the taxpayer, this is good enough to have on file for
the 3-year period following the close of the return.
True or False - correct answer False
Barry has prepared Susan's tax return. Throughout the process, Barry has
proved to be very trustworthy. Susan has signed the tax return and is ready
for her copy, but unfortunately Barry's copier is being serviced but will be fixed
in a few days. Susan agrees to pick up her copy whenever it is ready. This
arrangement is in compliance with tax preparer regulations.
True or False - correct answer False
An independent CPA serving as a tax return preparer for the Unicorn
Company recklessly disclosed information about the company that was
discovered while preparing the tax return. Which of the following is true?
, A. Although considered a bad practice, no penalty can be assessed
for such behavior.
B. A monetary penalty can be assessed against the tax return
preparer.
C. A penalty can only be assessed if the disclosed information was
financial in nature.
D. A penalty can only be assessed if the disclosed information
specifically included the names of individuals who had not agreed
to be so named. - correct answer B
Trent's Tax Service prepared George Dell's 2019 return for which Mr. Dell
paid Trent's $100. The return was audited and changes were made to both
income and expenses on the return but no additional tax was due. These
changes were the direct result of negligent actions on the part of Trent's Tax
Service. Is the IRS going to penalize Trent's Tax Service for this
understatement?
A. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to an unrealistic position under IRC Section
6694.
B. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to a negligence under IRC Section 6694.
C. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to willful or reckless conduct under IRC
Section 6694.
D. No. - correct answer D
answers correctly solved
Which of the following satisfies the copy/list retention requirement for tax
preparers?
A. A card file with the AGI and tax due or refund for each return
prepared
B. A spreadsheet with the name and taxpayer identification number,
tax year of each taxpayer for whom a return was prepared, and the
type of return
C. An electronic copy of each Form 1040 prepared, without
additional schedules
D. A paper copy of each EIC checklist, EIC worksheet and record of
how EIC information was received and from whom - correct answer B
Which of the following people is a tax preparer?
A. A person who is compensated for using a computer to copy
handwritten information into a fillable IRS tax form.
B. A person who is compensated for using a computer to complete
Schedules A, B, and D for a 1040 filer.
C. A person who is compensated for using a computer to complete a
tax return for his regular employer.
D. A person who is compensated for using a computer to
electronically file a tax return that someone else prepared. - correct answer
B.
,Tax preparers must provide an identifying number on returns which they sign.
Which number is the generally accepted identifying number?
A. Social Security Number
B. EFIN
C. PTIN
D. EIN - correct answer C.
Pierre and Leo are very close friends, but Pierre is still paying Leo to prepare
his tax return. Because they're so close, Leo doesn't have to sign the tax
return to claim primary responsibility for the preparation.
True or False - correct answer False
Which of the following people is a tax preparer?
A. A British citizen who is compensated for preparing U.S. tax returns
in England for Americans who live in England.
B. A volunteer for VITA who only prepares tax returns for VITA clients.
C. An IRS employee who assists taxpayers complete returns during
an IRS open house.
D. All of the above - correct answer A
When must a tax preparer provide a taxpayer with a copy of the taxpayer's
return?
A. Upon request
B. Within 30 days of the filing of the return
C. No later than the time the return is presented for the taxpayer's
signature
D. No later than the time the return is filed with the IRS - correct answer C
,Philip prepared his client's taxes 2 years ago. He is now going to throw away
his copy of the tax return and the list with the name and taxpayer identification
number for whom the return was prepared. Since it has been 2 years, Philip is
complying with regulations.
True or False - correct answer False, it is 3 years
Kevin, a paid tax preparer, has not received his PTIN. Can Kevin use his
Social Security number instead?
A. Yes
B. Yes, but must amend the return with his PTIN when he receives it
C. Yes, if the return is for a family member
D. No - correct answer D
Shirley provided a copy of a tax return she prepared for her client but didn't
have the resources for her own copy. If she just has the name and taxpayer
identification number of the taxpayer, this is good enough to have on file for
the 3-year period following the close of the return.
True or False - correct answer False
Barry has prepared Susan's tax return. Throughout the process, Barry has
proved to be very trustworthy. Susan has signed the tax return and is ready
for her copy, but unfortunately Barry's copier is being serviced but will be fixed
in a few days. Susan agrees to pick up her copy whenever it is ready. This
arrangement is in compliance with tax preparer regulations.
True or False - correct answer False
An independent CPA serving as a tax return preparer for the Unicorn
Company recklessly disclosed information about the company that was
discovered while preparing the tax return. Which of the following is true?
, A. Although considered a bad practice, no penalty can be assessed
for such behavior.
B. A monetary penalty can be assessed against the tax return
preparer.
C. A penalty can only be assessed if the disclosed information was
financial in nature.
D. A penalty can only be assessed if the disclosed information
specifically included the names of individuals who had not agreed
to be so named. - correct answer B
Trent's Tax Service prepared George Dell's 2019 return for which Mr. Dell
paid Trent's $100. The return was audited and changes were made to both
income and expenses on the return but no additional tax was due. These
changes were the direct result of negligent actions on the part of Trent's Tax
Service. Is the IRS going to penalize Trent's Tax Service for this
understatement?
A. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to an unrealistic position under IRC Section
6694.
B. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to a negligence under IRC Section 6694.
C. Yes, Trent's may be liable for a $250 penalty for understatement of
taxpayers liability due to willful or reckless conduct under IRC
Section 6694.
D. No. - correct answer D
