Tax Research Exam #1 Question and
answers rated A+
T/F: Tax planning only involves closed-fact situations? - correct answer False
T/F: Treasury Regulations are primary authority? - correct answer True
T/F: A circuit court of appeals decision will always carry more weight than a tax court
decision? - correct answer False
T/F: The first step in the research process is to make recommendations to the client? -
correct answer False
T/F: The last step in the research process is to make recommendations to the client? -
correct answer False
T/F: Revenue procedures, tax journals, and textbooks are all secondary sources of
authority? - correct answer False
T/F: Since trial level courts do not establish precedent, a citator only includes appellate
level cases? - correct answer False
T/F: Tax research in an open fact situation allows the tax advisor to be creative in
structuring a transaction and its tax consequences? - correct answer True
T/F: A client letter should include references to the Coe and specific cases so the client
will know that the researcher has been thorough? - correct answer False
T/F: Substantial authority includes IRS announcements, Treasury Regulations, and the
"Blue Book" explanation of legislation? - correct answer True
FIB: Tax compliance research involves ________-fact situations. - correct answer
closed
FIB: Wolter Kluwer's Standard Federal Income Tax Reporter, IRS Publications, and
Bittker and Eustice's Federal Income, Taxation of Corporations & Shareholers are
examples of _____ sources of authority., - correct answer secondary
FIB: The Internal Revenue Code, Revenue Rulings and a Tax Court decision are
examples of _____ sources of authority. - correct answer primary
FIB: In evaluating conflicting court cases, different decisions by the court of federal
claims and the Alabama district court would be considered an ____ conflict. - correct
answer horizontal
,FIB: After the researcher has determined the issue(s), the next step in the research
process is to _____. - correct answer search for authority
FIB: Providing a client with guidance on how to structure a divorce settlement would be
considered a tax _____ situation. - correct answer planning
FIB: Using the Boolean operators, a researcher looking for casualty and loss within 10
words of each other would enter the search as _______. - correct answer casualty
w/10 loss
FIB: Using the Boolean operators, a researcher looking for the exact phrase "installment
sale" would enter the search as ______. - correct answer "installment sale"
FIB: After locating a relevant case, the researcher should use the _____ to determine if
the IRS acquiesced in the case. - correct answer citator
FIB: Analyzing tax legislation is an example of _____ research. - correct answer policy
Why does a researcher use a citator?
A) To determine whether a private letter ruling exists on the subject
B) To determine if an IRS Publication covers the research topic
C) To check on authorities issued subsequently to a court decision
D) None of the above - correct answer C
Which of the following is not a primary source of authority?
A)the tax advisor
B) treasury regulation
C)revenue rulings
D)a 4th circuit court of appeals decision - correct answer A
Which of the following is not a secondary source of authority?
A)Wolter Kluwers standard federal income tax reporter
B)Thomson Reuters federal tax coordinator
C)IRS's revenue procedure
D)IRS's instructions for forms
E) All of the above are secondary sources - correct answer C
Before a tax advisor can locate the appropriate authority, he/she must:
A)identify the facts
B)determine the issue or questions
C)read the internal revenue code
D)use the citator
E)Both a and b - correct answer E
, Walter asked his tax advisor what assets he should use to make gifts to his
grandchildren. The tax advisors work is:
A)a close-fact situation
B)a tax compliance situation
C)a tax policy situation
D)a tax planning situation
E)an unknown-fact situation - correct answer D
Elizabeth started a new business during the year. When preparing her tax return, the
advisor must determine which expenses are start-up expenses. The advisors work is:
A)a closed-fact situation
B)a tax policy situation
C)a tax planning situation
D)an unknown-fact situation - correct answer A
Which of the following is not considered substantial authority under Code Sec. 6662?
A)a proposed regulation
B)a statement made by a congressman on the floor before enactment of a tax bill
C)a private letter ruling
D)a discussion in the blue book
E)all of the above are considered substantial authority - correct answer E
Which of the following facts would not be important in determining whether a child of a
divorced parent meets the definition of a dependent?
A)the age of the child
B)where the child lived during the year
C)the language in the divorce decree
D)the mother remarried during the year
E)all of the above are important - correct answer D
Molly leased a skybox at State University for the football season. She had deducted the
cost of the skybox asa business expense. Which of the following facts in not important
in determining if the skybox costs are deductible?
A)the breakdown of the cost between the skybox lease and the football tickets
B)whether the team won or lost the game
C)how many games Molly attended
D)who else used the skybox during each game
E)all of the above are important facts - correct answer B
Which of the following would not usually be included in a letter to an individual client that
is a doctor?
A)a review of the facts
B)a detailed review of the three relevant cases
answers rated A+
T/F: Tax planning only involves closed-fact situations? - correct answer False
T/F: Treasury Regulations are primary authority? - correct answer True
T/F: A circuit court of appeals decision will always carry more weight than a tax court
decision? - correct answer False
T/F: The first step in the research process is to make recommendations to the client? -
correct answer False
T/F: The last step in the research process is to make recommendations to the client? -
correct answer False
T/F: Revenue procedures, tax journals, and textbooks are all secondary sources of
authority? - correct answer False
T/F: Since trial level courts do not establish precedent, a citator only includes appellate
level cases? - correct answer False
T/F: Tax research in an open fact situation allows the tax advisor to be creative in
structuring a transaction and its tax consequences? - correct answer True
T/F: A client letter should include references to the Coe and specific cases so the client
will know that the researcher has been thorough? - correct answer False
T/F: Substantial authority includes IRS announcements, Treasury Regulations, and the
"Blue Book" explanation of legislation? - correct answer True
FIB: Tax compliance research involves ________-fact situations. - correct answer
closed
FIB: Wolter Kluwer's Standard Federal Income Tax Reporter, IRS Publications, and
Bittker and Eustice's Federal Income, Taxation of Corporations & Shareholers are
examples of _____ sources of authority., - correct answer secondary
FIB: The Internal Revenue Code, Revenue Rulings and a Tax Court decision are
examples of _____ sources of authority. - correct answer primary
FIB: In evaluating conflicting court cases, different decisions by the court of federal
claims and the Alabama district court would be considered an ____ conflict. - correct
answer horizontal
,FIB: After the researcher has determined the issue(s), the next step in the research
process is to _____. - correct answer search for authority
FIB: Providing a client with guidance on how to structure a divorce settlement would be
considered a tax _____ situation. - correct answer planning
FIB: Using the Boolean operators, a researcher looking for casualty and loss within 10
words of each other would enter the search as _______. - correct answer casualty
w/10 loss
FIB: Using the Boolean operators, a researcher looking for the exact phrase "installment
sale" would enter the search as ______. - correct answer "installment sale"
FIB: After locating a relevant case, the researcher should use the _____ to determine if
the IRS acquiesced in the case. - correct answer citator
FIB: Analyzing tax legislation is an example of _____ research. - correct answer policy
Why does a researcher use a citator?
A) To determine whether a private letter ruling exists on the subject
B) To determine if an IRS Publication covers the research topic
C) To check on authorities issued subsequently to a court decision
D) None of the above - correct answer C
Which of the following is not a primary source of authority?
A)the tax advisor
B) treasury regulation
C)revenue rulings
D)a 4th circuit court of appeals decision - correct answer A
Which of the following is not a secondary source of authority?
A)Wolter Kluwers standard federal income tax reporter
B)Thomson Reuters federal tax coordinator
C)IRS's revenue procedure
D)IRS's instructions for forms
E) All of the above are secondary sources - correct answer C
Before a tax advisor can locate the appropriate authority, he/she must:
A)identify the facts
B)determine the issue or questions
C)read the internal revenue code
D)use the citator
E)Both a and b - correct answer E
, Walter asked his tax advisor what assets he should use to make gifts to his
grandchildren. The tax advisors work is:
A)a close-fact situation
B)a tax compliance situation
C)a tax policy situation
D)a tax planning situation
E)an unknown-fact situation - correct answer D
Elizabeth started a new business during the year. When preparing her tax return, the
advisor must determine which expenses are start-up expenses. The advisors work is:
A)a closed-fact situation
B)a tax policy situation
C)a tax planning situation
D)an unknown-fact situation - correct answer A
Which of the following is not considered substantial authority under Code Sec. 6662?
A)a proposed regulation
B)a statement made by a congressman on the floor before enactment of a tax bill
C)a private letter ruling
D)a discussion in the blue book
E)all of the above are considered substantial authority - correct answer E
Which of the following facts would not be important in determining whether a child of a
divorced parent meets the definition of a dependent?
A)the age of the child
B)where the child lived during the year
C)the language in the divorce decree
D)the mother remarried during the year
E)all of the above are important - correct answer D
Molly leased a skybox at State University for the football season. She had deducted the
cost of the skybox asa business expense. Which of the following facts in not important
in determining if the skybox costs are deductible?
A)the breakdown of the cost between the skybox lease and the football tickets
B)whether the team won or lost the game
C)how many games Molly attended
D)who else used the skybox during each game
E)all of the above are important facts - correct answer B
Which of the following would not usually be included in a letter to an individual client that
is a doctor?
A)a review of the facts
B)a detailed review of the three relevant cases
