Definitions B Law Flashcards
Tax Return Preparers
definition
R5-3
prepares fed tax return for compensation
Tax Practitioner
definition
R5-5
individual who practices before the IRS
–attorneys, CPAs, enrolled agents, enrolled actuaries, enrolled retirement plan agents
Primary Authority
definition
R5-3
- -Internal Revenue Code provisions
- -regulations
- -Revenue rulings
- -court cases
- -NOT IRS publications
Disregard
definition
R5-3
careless,
reckless,
intentional disregard of rules/regulations
More likely than not
definition
R5-.3
- > 50% likelihood of a tax position being upheld by the courts
- -more stringent than “substantial authority”
Reasonable Basis
definition
R5-4
> 20% tax position upheld
Substantial Authority
definition
R5-4
> 33%, but
Negligence
definition
R5-4
Failure to:
- -make reasonable attempt to comply w/ provisions of IR laws, or
- -exercise ordinary and reasonable care, or
- -keep adequate books and records, or
- -substantiate items properly
Reportable Transaction
definition
R5-4
information required to be included with a return because it has potential for tax avoidance or tax evasion
Tax Avoidance vs Tax Evasion
definitions
R5-4
Tax Avoidance
–legal use and application of tax laws to reduce tax amount due
Tax Evasion
–illegal means and methods to not pay taxes
Tax Shelter
R5-5
plan or arrangement if a significant purpose is the avoidance or evasion of fed income tax
Tax Shelter
definition
R5-5
Plan or arrangement if a significant purpose is the avoidance or evasion of fed income tax
- avoidance=legal
- evasion=illegal
