RI

Question 1

substantial authority?

Answer 1

refers to a standard that is used in determining whether or not a tax position taken in a return is supported by relevant tax authorities

Question 2

treasury department 230

Answer 2

IRS publication, addresses practicing before the IRS. provides rules regarding due diligence for ALL WRITTEN ADVICE concerning one or more federal tax matter

Question 3

tax preparer v practitioner

Answer 3

practitioners PRACTICe before IRS, prepares do not

Question 4

which court should a taxpayer chose to start with

Answer 4

US TAX COURT

Question 5

failure to pay penalty

Answer 5

0.5% of the tax due for each month the tax is not paid, up to a maximum of 25% of the unpaid tax

Question 6

failure to file penalty

Answer 6

$210 for each month up to max of 12 months the return is late, times # of partners

Question 7

reasonable basis standard

Answer 7

~20% chance of success, will avoid the negligence penalty (for understatement of non-substantial amount) and penalty for rules and regulations (even if tax return position isn’t disclosed)

Question 8

tax shelter (3 things)

Answer 8

1. partnership or other entity 2. investment plan or arrangement 3. other plan or arrangement to avoid or evade federal income tax

Question 9

actual fraud mnemonic

Answer 9

(MAIDS) material mis rep of fact, actual reliance, intent to induce reliance, damages, scienter

Question 10

3rd party beneficiary rule

Answer 10

(intended user rule)
accountant is liable to 3rd parties for negligence if the accountant had reason to know the 3rd party would rely on his/her work

Question 11

how long does a taxpayer qualify as “qualified widower” after a spouse dies?

Answer 11

2 years following the year of death if the taxpayer maintains a household where a dependent child lives

Question 12

taxation on an annuity payment?

Answer 12

original investment/# years = non taxable return of capital

ex: 100k for a 10 yr annuity that pays 12K per year,
100k/10 = 10K return of capital
12K-10K = 2K taxable per year

Question 13

SUPORT TEST

Answer 13

qualifying relative is a dependent if:
S- support test (>50% supply support)
U- under 4.3k income
P- precludes dependent
O- only US citizen
R- relative and 
t- tax payer lives w person for WHOLE YEAR

Question 14

if taxpayer’s spouse dies the current year, what is status

Answer 14

even though marital status is determined on the last day of the year, can still claim a MFJ status the year the spouse dies

Question 15

CARES Test

Answer 15

C- close relative
A- must be under 19 or under 24 if in college
R- residency must be same for 1/2 year
e- eliminate gross income test
s- child must not contribute more than 1/2 the support

Question 16

QBI DEDUCTION (category 1)

Answer 16

20% of QBI deductible up to $164,900 for single tax payer (329,800 MFJ)
no wage exclusion issue

Question 17

QBI deduction (category 2)

Answer 17

above  214,900 (429,800 MFJ)
(1) take regular QBI deduction (x20%)
(2) then lesser of:
50% of wages or
50% of wages + 2.5% of UBIA qualified prop

then lesser of either (1) or (2)

*note: SSTB with greater income of 214,900 is not eligible for the QBI deduction