FC3

Question 1

Reasonable Basis =

Answer 1

> 20% Chance

Question 2

Realistic Possibility =

Answer 2

> 33% chance

Question 3

Under what circumstances can a CPA recommend a tax position to a client?

Answer 3

1. There’s a realistic possibility it will be sustained
   or
2. A reasonable basis and it is disclosed

Question 4

What things should a CPA never tell a tax client?

Answer 4

1. This isn’t right, but the IRS never checks

2. This isn’t right, but we will use it to bargain the IRS down

Question 5

What format should a tax preparers advice to a client be given in?

Answer 5

No Standard format required

Question 6

When are written communications with client preferable?

Answer 6

for complicated or important matters

Question 7

What is tax Preparers responsibility to inform IRS of error?

Answer 7

Member need not and can not without client’s permission.

Question 8

What is the responsibility of a CPA regarding errors contained in a previously filed tax return?

Answer 8

Advise client of errors

Question 9

Define Tax Return Preparer

Answer 9

person who is paid to prepare or retain employees to prepare a substantial portion or any federal tax return

Question 10

T or F: A TRP can prepare tax returns as a fiduciary?

Answer 10

False

Question 11

List unreasonable positions

Answer 11

1. No “Substantial Authority” (40% chance) for position
2. No “reasonable Basis” (20 % chance) for disclosed position
3. Not “more likely than not” (50% chance) for tax shelter position.

Question 12

What does JEEP stand for?

Answer 12

Joint Ethics Enforcement Program

Question 13

List items that can cause ato expulsion from AICPA

Answer 13

1. felony
2. failure to file tax return
3. filing fraudulent tax return
4. aiding fraudulent tax return

Question 14

Who grants CPA license?

Answer 14

State boards of accountancy

Question 15

List priorities for following:

1. Unsecured Vs Secured
2. Secured Vs Secured
3. Secured vs Perfected
4. Perfected vs Perfected

Answer 15

1. secured
2. First to attach
3. Perfected
4. First to perfect

Question 16

What parties to perfected security interests give priority to?

Answer 16

1. Unsecured creditors
2. unperfected secured parties
3. subsequent lien creditors
4. trustees in bankruptcy
5. most buyers

Question 17

What types of buyers takes precedence over perfected secured interests?

Answer 17

Buyers in ordinary course of business

Question 18

What is the general rule of priority between 2 perfected security interests?

Answer 18

1st in time of perfection is first in right

Question 19

What are debtor’s rights when debt is paid in full?

Answer 19

Debtor can demand that the creditor file a release of collateral

Question 20

Explain what a breach of the peace is

Answer 20

A violation of the law in repossessing collateral, such as a trespass to take the property

Question 21

Describe right of redemption

Answer 21

If the secured party is not allowed to keep the collateral in possession in full satisfaction of debt, until there is a sale the debtor or any other secured party has a right of redemption and by doing so can regain possession of collateral

Question 22

List the rights of peaceful possession upon the debtor’s default

Answer 22

Possession without committing:

1. Trespass
2. Assault and/or battery
3. breaking and entering

Question 23

List order of distribution of proceeds from the sale of collateral

Answer 23

1. Expenses in repossession, keeping, and resale
2. Balance of debt owed to secured party
3. junior lien holders who have made written demands
4. debtor unless collateral is accounts or chattel paper

Question 24

What is the purpose of the soldiers and sailors relief act?

Answer 24

Creditor cannot reposses goods from active duty military debtors

Question 25

List rights upon possession by secured party

Answer 25

1. secured party with proper notice to debtor and others and no objection can keep collateral in satisfaction of debt. cannot keep if it is consumer goods and debtor has paid 60% or more
2. Can always sell in reasonable commercial manner

Question 26

Describe the 60% rule as it relates to secured party

Answer 26

if collateral is consumer goods and 60% or more of the debt or price has been paid then creditor must sell the goods