Recent Tax Developments (March-April 2012) (00119495, 2012)
Recent Tax Developments (May-June 2012) (00299787, 2012)
Recent Tax Developments (July-August 2012) (00268574, 2012)
Recent Tax Developments (November-December 2012) (00319895)
- Recent Tax Developments (September-October 2011) (00090338)
Final Exam > Results Page
final exam score:
final exam status:
100%
Question 1
Correct
What happens to a taxpayer’s equitable relief request that was previously denied because of the two-year limit?
The taxpayer is out of luck.
(You Answered) (Correct Answer) The taxpayer can file a new request (if the collection statute of limitations has not expired).
The IRS will automatically grant the relief.
Question 2
Correct
The rate for medical driving in 2011 is:
14 cents per mile
19 cents per mile
23.5 cents per mile
(You Answered) (Correct Answer) 19 cents per mile for the first half of the year and 23.5 cents per mile for the second half of the year
Question 3
Correct
For substantiation purposes, the IRS eliminated:
The requirement to keep track of business driving
(You Answered) (Correct Answer) The high-low substantiation method
The requirement to keep track of business travel
Question 4
Correct
Which statement regarding “tax home” is correct?
Spouses must have the same tax home.
The tax home is always where the taxpayer lives.
(You Answered) (Correct Answer) The tax home is the taxpayer’s home (principal residence) when there is no business location.
Question 5
Correct
In order for a partial annuity to be treated as a separate contract, the amounts received must extend for at least:
12 months
(You Answered) (Correct Answer) 10 years or more (or for life)
For life only
Question 6
Correct
The hobby loss rule requires the taxpayer to demonstrate:
(You Answered) (Correct Answer) A profit motive
That the business is always profitable
That the taxpayer relies solely on the activity for income
Question 7
Correct
An opportunity cost is each of the following except:
An imputed expense that is not deductible
(You Answered) (Correct Answer) Entered on the books as an expense
Used as a measure of comparison
Question 8
Correct
The Patient Protection and Affordable Care Act has been declared constitutional by an appellate court.
(You Answered) (Correct Answer) True
False
Question 9
Correct
The federal Defense of Marriage Act has ______ .
Been repealed by Congress
Been declared unconstitutional by the U.S. Supreme Court
(You Answered) (Correct Answer) Continues to be in effect but will not be enforced by the U.S. Department of Justice
Question 10
Correct
At the present time, the IRS position on same-sex married couples is:
(You Answered) (Correct Answer) The Defense of Marriage Act position
Nonenforcement of the Defense of Marriage Act
Deference to the states
- Recent Tax Developments (March-April 2012) (00119495, 2012)
Final Exam > Results Page
final exam score:
final exam status:
90%
Question 1
Correct
Which statement about the payroll tax cut is correct:
(You Answered) (Correct Answer) It applies to both employees and self-employed individuals.
It applies to both employees and employers.
It applies only to employers.
It applies only to self-employed individuals.
Question 2
Correct
Which statement about the payroll tax cut is not correct?
The reduction is 2 percentage points of the employee share of Social Security taxes
(You Answered) (Correct Answer) The reduction is 2 percentage points of both the employer and employee share of Social Security taxes
The Medicare portion of FICA and self-employment tax is not changed.
The income tax deduction for the self-employment tax is not one half of the total self employment tax payment but rather the entire so-called employer share.
Question 3
Correct
Which statement concerning regulations on repairs and improvements is correct?
The regulations are final.
Most tax experts agree that the regulations are highly favorable.
(You Answered) (Correct Answer) There are safe harbors in the new regulations.
The IRS will grant a request for a change of accounting method under the regulations for 2011 returns.
Question 4
Correct
For purposes of equitable innocent spouse relief, which of the following statements is correct?
(You Answered) (Correct Answer) There are procedures for determining economic hardship based on certain minimum standards.
There must be a majority of factors weighing in the requesting spouse’s favor.
Spouses in community property states cannot get innocent spouse relief.
Actual knowledge of an understatement always prevents innocent spouse relief.
Question 5
Incorrect
Which one of the following types of damages is tax free?
(You Answered) Punitive damages for personal physical injury
Compensatory damages for defamation
(Correct Answer) Compensatory damages for injuries resulting from a car accident
Lost wages
Question 6
Correct
The IRS ruled that restitution payments to victims of human trafficking are:
(You Answered) (Correct Answer) Fully excludable
Excludable to the extent they are for medical costs
Fully taxable
Excludable to the extent they are for attorney’s fees
Question 7
Correct
Which of the following groups of taxpayers had a meaningful increase in their audit rate?
S corporations
Partnerships
Individuals with income under $200,000
(You Answered) (Correct Answer) Individuals with income over $1 million
Question 8
Correct
Which statement concerning the latest tax gap is correct?
It declined from the previous tax gap amount.
(You Answered) (Correct Answer) Schedule C and F filers were responsible for about one third of the tax gap.
The tax gap does not take into account IRS collection activities.
The gross tax gap takes into account both voluntary payments and enforcement activities.
Question 9
Correct
The National Taxpayer Advocate’s Annual Report identified all of the following issues as among the most litigated except:
Innocent spouse relief
Trade or business expenses
(You Answered) (Correct Answer) Itemized medical deductions
Itemized charitable contribution deductions
Question 10
Correct
Mobile technology through apps can be used for all of the following except:
Doing tax research
(You Answered) (Correct Answer) E-filing Form 1040
Tax recordkeeping
Staying up on IRS developments
- Recent Tax Developments (May-June 2012) (00299787, 2012)
Final Exam > Results Page
final exam score:
final exam status:
100%
Question 1
Correct
The depreciation dollar limit for the purchase in 2012 of a used truck or van is:
(You Answered) (Correct Answer) $3,360
$11,360
$25,000
$5,300
Question 2
Correct
Which statement about inclusion amounts is correct?
The same inclusion amounts apply to passenger cars and light trucks.
(You Answered) (Correct Answer) The 2012 tables apply only to vehicles first leased in 2012.
The inclusion amounts apply regardless of the cost of the vehicle.
The inclusion amounts do not depend upon the year of the vehicle.
Question 3
Correct
Which of the following is a permissible S corporation shareholder?
Traditional IRA
Roth IRA
(You Answered) (Correct Answer) Qualified Subchapter S trust (QSST)
Nonresident Alien
Question 4
Correct
Foster care payments are excludable from gross income if:
The payments are made pursuant to a state foster care program.
The payments are made by the state or a qualified agency.
The payments are made for the care of a qualified individual in the foster care provider’s home.
(You Answered) (Correct Answer) All of the above.
Question 5
Correct
An installment agreement requires financial statements if:
The tax liability does not exceed $50,000.
The tax liability exceeds $50,000, but the taxpayer pays down the liability to this limit.
(You Answered) (Correct Answer) The tax liability exceeds $50,000 and there is no pay down by the taxpayer.
The tax liability exceeds $25,000.
Question 6
Correct
At the top of the Dirty Dozen tax scams list is:
(You Answered) (Correct Answer) Identity theft
Phishing
Return preparer fraud
Hiding income offshore
Question 7
Correct
The IRS interest rate for the second quarter of 2012 on large corporate underpayments is:
0.5 percent
3 percent
(You Answered) (Correct Answer) 5 percent
2 percent
Question 8
Correct
In order to meet the duty of accuracy in Circular 230, a paid preparer must:
(You Answered) (Correct Answer) Be reasonably assured that the information provided by the client is accurate.
Perform an “audit” on each client’s return.
Take the client’s word, regardless of any concerns that the preparer may have.
Do not ask for more documentation to support client’s claim
Question 9
Correct
For purposes of due diligence with respect to the earned income tax credit, the paid preparer must:
Have the appropriate clients complete Form 8867.
Complete the EITC worksheet in the IRS instructions to Form 1040, in Publication 596, or a similar document.
Retain the form and worksheet with workpapers.
(You Answered) (Correct Answer) All of the above.
Question 10
Correct
If a paid preparer discovers an error on a client’s old tax return, Circular 230 requires:
The preparer to promptly notify the client if the preparer was responsible for the error.
(You Answered) (Correct Answer) The preparer to promptly notify the client, whether or not the preparer was responsible for the error.
The preparer need not do anything.
The preparer must notify the IRS.
- Recent Tax Developments (July-August 2012) (00268574, 2012)
Final Exam > Results Page
final exam score:
final exam status:
80%
Question 1
Incorrect
A taxpayer overstates his basis in property so that he minimizes his gain; this results in an understatement of income of more than 25% of gross income. Which statute of limitations applies?
(Correct Answer) Three years
(You Answered) Six years
10 years
Indefinitely
Question 2
Correct
The limitation on home equity debt applies:
On a per taxpayer basis
(You Answered) (Correct Answer) On a per residence basis
On the amount of interest paid
On the value of the home
Question 3
Correct
Which of the following is not an indication of beneficial ownership?
A right to possess the property and to enjoy the use, rents, and profits from it
The obligation to pay property taxes, assessments, and charges
The obligation to maintain the property
(You Answered) (Correct Answer) Legal title
Question 4
Correct
A homeowner buys a home in 2012 and prepays mortgage insurance premiums. (Assume her AGI does not exceed $100,000.) She must amortize the deduction for the premiums if the issuer of the insurance is:
(You Answered) (Correct Answer) The Federal Housing Administration
The Veterans Administration
The Rural Housing Administration
Any of the above
Question 5
Correct
An appellate court ruling on the federal Defense of Marriage Act (DOMA) has:
Lifted the injunction of the lower court on same-sex couples filing joint federal income tax returns
Imposed a new injunction on same-sex couples filing joint federal income tax returns
(You Answered) (Correct Answer) Continued the injunction of the lower court on same-sex couples filing joint federal income tax returns
Declared DOMA to be constitutional
Question 6
Correct
Deductible alimony requires that payments:
(You Answered) (Correct Answer) Cease on the death of the recipient-spouse
Cease on the death of the payor-spouse
Cease on the death of either the recipient-spouse or payor-spouse
Cease after three years
Question 7
Correct
The maximum contribution to a health savings account in 2013 for self-only coverage (assuming the taxpayer is not 55 or older) is:
$1,250
(You Answered) (Correct Answer) $3,250
$6,250
$6,450
Question 8
Correct
The IRS can apply an individual’s tax refund to:
The trust fund penalty under Code Sec. 6672
Child support
Student loan debt
(You Answered) (Correct Answer) Any of the above
Question 9
Incorrect
The IRS interest rate applied for the third quarter of 2012 to the portion of large corporate overpayments exceeding $10,000 is:
(Correct Answer) 0.5%
2%
3%
(You Answered) 5%
Question 10
Correct
If the Mobile Workforce State Income Tax Simplification Act becomes law, a worker will be subject to state income tax only if he or she:
Is domiciled in the state
Elects to pay tax in the state other than the state of residence
(You Answered) (Correct Answer) Performs work in the state for more than 30 days during the calendar year
Performs work in the state for more than 330 days during the calendar year
- Recent Tax Developments (November-December 2012) (00319895)
Final Exam > Results Page
final exam score:
final exam status:
90%
Question 1
Incorrect
Which statement about the high-low substantiation method is correct?
(You Answered) It applies to CONUS and OCONUS.
The portion of the per diem rate for meals need not be reduced by the 50% limit.
(Correct Answer) The rates are fixed on the government’s fiscal year.
The rates obviate the need for all substantiation.
Question 2
Correct
Which statement concerning illegal income is correct?
(You Answered) (Correct Answer) The Tax Code specifically bars deductions related to trafficking in controlled substances.
Expenses related to income from an illegal business are deductible.
As long as a business is legal under state law, the federal government will permit expenses related to it even though the business is illegal under federal law.
The U.S. Supreme Court has said that illegal income need not be included in gross income because it violates Fifth Amendment rights.
Question 3
Correct
Workers’ compensation benefits received by someone who is not receiving Social Security disability payments are:
(You Answered) (Correct Answer) Always tax free
Includible in gross income at 50%
Includible in gross income at 85%
Fully taxable
Question 4
Correct
Which of the following is a “contingency” that could result in recharacterizing a portion of spousal support as nondeductible child support?
The child’s attainment of age 18
The child moving out of the family home
Any condition specified in the divorce decree
(You Answered) (Correct Answer) All of the above
Question 5
Correct
Which statement concerning whistleblower awards is incorrect?
The IRS has a Whistleblower Office
(You Answered) (Correct Answer) They are tax free
Taxpayers can receive up to 30% of what the IRS collects
Expenses incurred in obtaining awards are deductible
Question 6
Correct
Which is not a requirement for deferring gain on the sale of small business stock?
Electing deferral on a tax return
Showing that the old and new stock each qualify as small business stock
(You Answered) (Correct Answer) The taxpayer having assets below set limits
Reinvesting proceeds within 60 days
Question 7
Correct
What is the IRS rate on underpayments of individuals for the fourth quarter of 2012?
0.5 percent
2 percent
(You Answered) (Correct Answer) 3 percent
5 percent
Question 8
Correct
If a child who is the beneficiary of a 529 account does not go to college, any of the following are options except:
Wait to see whether college is in the beneficiary’s future
Name a new beneficiary, such as a sibling
Take a distribution from the account
(You Answered) (Correct Answer) Roll the account into a Coverdell ESA
Question 9
Correct
Which is not a qualifying expense for purposes of tax-free distributions from 529 plans?
(You Answered) (Correct Answer) A computer
Tuition
Fees
Room and board
Question 10
Correct
Which statement about the high-low substantiation rate is incorrect?
(You Answered) (Correct Answer) The IRS eliminated this substantiation method for FY 2013.
The rates for FY 2013 are the same as FY 2012.
The same high-cost locations for FY 2012 apply for FY 2013.
The rates have been extended to OCONUS.