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ACCT 431 > Midterm > Flashcards

Midterm Flashcards

1
Q

What is Circular 230

A

Law governing who may practice before the IRS

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2
Q

What are the elements of a tax practice

A

planning, research, litigation

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3
Q

What is the difference between tax avoidance and tax evasion

A

Tax avoidance is legal,evasion is illegal because its the illegal nonpayment of taxes

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4
Q

Who may practice before the IRS?

A

Attorneys, enrolled agents, CPAs, enrolled actuaries

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5
Q

What is a tax preparer?

A

Unenrolled person who signs a tax return as having prepared it for a taxpayer is authorized to conduct “limited practice” before the IRS

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6
Q

What is an open transaction?

A

transaction where tax practitioner maintains some degree of control over the tax liability

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7
Q

What is a closed transaction?

A

transaction where all pertinent actions have been completed

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8
Q

What is the concept of due diligence?

A

means tax practitioners in preparing tax returns in their practice before the IRS involve more than a simple error but less than willful and reckless misconduct

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9
Q

What are covered opinions?

A

strict standards imposed by IRS as it relates to transactions that are the same or similar to a transaction at the time the advice is rendered. Any partnership or entity investment plan or arrangement for which the principal purpose was avoidance or evasion

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10
Q

What is mean of SSTS 4: use of estimates

A

A member may prepare tax returns that use estimates if they cannot locate exact amounts

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11
Q

What is the meaning of SSTS 1: return position

A

Must have a good faith belief that position has a realistic possibility of being sustained administratively or judicially

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12
Q

What are the effect of Sarbanes Oxley?

A

Firms must rely on its own estimates not the firm they’re auditing. Same firm that audits cannot do tax work

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13
Q

What are the steps in the tax research process

A
  1. establish facts, identify issues, locate authority, evaluate authority, develop conclusion, communicate recommendation
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14
Q

Why is tax an iterative process?

A

Once you find an answer a new issue may cause additional research

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15
Q

What is primary authority?

A

statutory, administrative, judicial

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16
Q

What are statutory sources of law?

A

US Constitution, tax treaties, laws passed by congress

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17
Q

What are administative sources of law?

A

Treasury rulings, IRS regs, revenue rulings

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18
Q

What is secondary authority?

A

Tax services, journals, textbooks, treatises, newsletters

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19
Q

How does tax provisions affect tax research and planning

A

It may cause a company to change the manner in which they compute tax liability

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20
Q

When was the federal income tax law passed

A

During the civil war - August 5, 1861

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21
Q

What the statutory sources of federal law?

A

Constitution, tax treaties, internal revenue code

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22
Q

What are the administrative sources of law?

A

Treasury regs, revenue rulings, revenue procedures

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23
Q

How are tax protestors handled?

A

Subject to $5,000 fine for frivolous tax return, $25,000 by tax court for frivolous matter

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24
Q

What is the source of federal tax law?

A

The constitution

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25
Q

What are tax treaties?

A

Agreements negotiated between countries concerning the treatment of entities subject to tax in both countries – primary authority. President can enter with advice / consent of senate

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26
Q

What cause a treaty to terminate

A

expire, mutual decision to terminate, new treaty between two countries

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27
Q

How does a tax bill progress?

A

House of Reps - Ways Means Committee - joint conference committee - revisions - signed by president

28
Q

What is a committee report

A

explanations of elements of the proposed changes for each tax proposal

29
Q

PL 99-514 mean

A

99 - session of congress, 514- bill number

30
Q

How is tax code organized

A

subtitle, chapter, subchapter, part, section, subsection

31
Q

What is Section 1 of the Internal Revenue Code

A

Income tax

32
Q

What is the principle of effective date?

A

Researcher needs to be aware of effective date of a regulation. Provision could be after or before changes

33
Q

Do proposed regulations have the effect of full law?

A

No

34
Q

When do temporary regulations expire?

A

3 years after issuance

35
Q

When is a regulation effective?

A

When filed with Federal Register

36
Q

What does 1.162-21(a)(2) signify

A

1 - regulation type, 162- code section 21 - regulation number, a - paragraph 2 - subparagraph

37
Q

Do revenue rulings have same effect of regulations?

A

No

38
Q

Rev Rul 2010-5, 2010-4, IRB 312 means

A

2010-5 is 5th ruling of 2010, 2010-4 is 4th week of 2010, IRB 312 - 312th page of IRB

39
Q

What is a TAM?

A

Technical advice memo - issued by national office after an agent ask for advice when issue arises during audit that cant be answered. Cannot be relied upon by other tax payers

40
Q

What is a private letter ruling?

A

Response to taxpayer’s request for IRS position on specific tax issue

41
Q

What does acquiescence mean?

A

When a ruling while adverse to the IRS, the IRS chooses to follow it

42
Q

What does nonacquience mean?

A

When the IRS chooses to follow an adverse decision but only for the one tax payer

43
Q

What does AOD mean?

A

Actions on Decisions. published by IRS to describe their acquiescence or nonacquiescence to decision

44
Q

What is the Internal Revenue Bulletin?

A

Official publication for pronouncements of the IRS

45
Q

What is the importance of announcements and notices?

A

Provide immediate or short term value for approaching deadline

46
Q

Describe vertical flow of federal tax system?

A

supreme court - us court of appeals - us district court - tax court

47
Q

How does burden of proof work?

A

The taxpayer always has a burden of proof in a case

48
Q

What does adhoc mean?

A

For one purpose

49
Q

Who is the appeallant?

A

Person who appeals a decision

50
Q

What is a writ of certiorari?

A

Process by which the supreme court hears a case

51
Q

Who is a defendant?

A

Party responsible for responding to compliant

52
Q

What does enbanc mean?

A

Decision where the entire court is involved instead of single judge

53
Q

What does vacate mean?

A

A complete reversal or abandonment of prior decision

54
Q

Describe the structure of tax court

A

Tax court is a national traveling court, with 19 judges, no jury,. The plantiff doesnt pay the tax. Each judge is appointed for a 15 year term by the President

55
Q

Describe structure of district court

A

Jury optional, must pay tax, judges are generalists, one judge hears case

56
Q

What is AFTR

A

American Federal Tax reports

57
Q

What is USTC?

A

US tax cases used by CCH

58
Q

Describe the structure of Court of Federal claims

A

16 judges, must pay tax, no jury, generalists, national, periodic travel

59
Q

What is a regular decision?

A

Unique or new point of law

60
Q

What is a memorandum?

A

When a chief judge concerns application of existing law

61
Q

What is a summary opinion?

A

Decision made in small case courts, they are not precedent and cannot be used in other cases

62
Q

Where are tax court decisions published?

A

GPO

63
Q

What is the golsen rule?

A

Tax court may reach different/ opposite decisions based on identical facts in different geographical areas

64
Q

Small claim court rule?

A

Overpayment cannot exceed $50,000 per year

65
Q

What is tax court rule 155?

A

Tax court is not responsible for computing the tax owed to the government or refund due to the taxpayer

ACCT 431 (5 decks)

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