Question & Answer

Yong’s tax return was audited because he calculated his tax liability incorrectly.  What IRS audit procedure identified his tax return for audit?

Campbell’s tax return was audited because they failed to report on their tax return interest they earned.  What IRS audit selection method identified their tax return?

Sophia recently won a tax case litigated in the 7th Circuit.  She recently heard that the Supreme Court denied the writ of certiorari.  Should she be happy or not, and why?

In choosing a trial-level court, how should a court’s previous rulings influence the choice?  How should circuit court rulings influence the taxpayer’s choice of a trial-level court?

Paula could not reach an agreement with the IRS at her appeals conference and has just received a 90-day letter.  If she wants to litigate the issue but does not have sufficient cash to pay the proposed deficiency, what is her best court choice? 

Using the facts from the previous problem, how would your answer change if Latoya understated her income by 40 percent? How would your answer change if Latoya intentionally failed to report as taxable income any cash payments she received from her clients?

Latoya filed her tax return on February 10th this year.  When will the statute of limitations expire for this tax return?

Shane has never filed a tax return despite earning excessive sums of money as a gambler.  When does the statute of limitations expire for the years in which Shane has not filed a tax return?  

Jamarcus, a full-time student, earned $2,500 this year from a summer job.  He had no other income this year and will have zero federal income tax liability this year.  His employer withheld $300 of federal income tax from his summer pay.  Is Jamarcus required to file a tax return?  Should Jamarcus file a tax return?  

The estate of Monique Chablis earned $450 of income this year. Is the estate required to file an income tax return?

Molto Stancha Corporation had zero earnings this fiscal year; in fact, it lost money. Must the corporation file a tax return?

Ahmed does not have enough cash on hand to pay his taxes.  He was excited to hear that he can request an extension to file his tax return.  Does this solve his problem?  What are the ramifications if he doesn’t pay his tax liability by April 15?

What are the tax return preparer’s standards to avoid a penalty for recommending a tax return position?

What are the taxpayer’s standards to avoid the substantial understatement of tax penalty?

What are some of the most common civil penalties imposed on taxpayers?

What are the basic differences between civil and criminal tax penalties?

What determines whether someone is considered a tax return preparer?

What are some of the common law issues that a tax practitioner may face with respect to their duties and how might a tax practitioner avoid these issues?

What is Circular 230?

Levi is recommending a tax return position to his client.  What standard must he meet to satisfy his professional standards?  What is the source of this professional standard?

Identify some of the sources for tax professional standards.  What are the potential ramifications of failing to comply with these standards?

What is the general rule for how many authorities a research memo should discuss?

How are citators used in tax research?

Armando identifies a tax research question as being a question of fact.  What types of authorities should he attempt to locate in his research?

Nola, a tax novice, has a fairly simple tax question.  Besides tax services, what are some sources that she can use to answer her question?