ANSWER: POINTS: 1 DIFFICULTY: Easy

Transcription

1 1. Which of the following statements escries the tax research process? a. It is strictly linear.. It requires mechanical skills comine with critical thinking. c. It requires the aility to use complex mathematical techniques to ientify an locate tax authorities.. All of the aove. 2. All of the following are goals of tax research EXCEPT? a. to alance the nee for efficiency against the nee for thoroughness. to alance the client s tax goals with the client s nontax, personal consierations c. to fin a efensile solution to a client s prolem. to fin a perfect solution to a client s prolem, no matter how long it takes 3. Collateral estoppel is a legal concept which: a. allows relitigation on the same facts or same issues. ars relitigation on the same facts or same issues c. requires that the court resolve factual issues in a taxpayer s favor. none of the aove DIFFICULTY: Moerate 4. The first step in the tax research process is to: a. estalish the facts. ientify the issues c. locate authority. evaluate authority a Powere y Cognero

2 5. Once the initial facts have een gathere an the issues efine, the tax researcher must: a. evelop conclusions an recommenations. evaluate the authority c. contact the IRS. locate the authority 6. In a close-fact prolem, the main goal of tax research is to: a. etermine several alternative courses of future action for the taxpayer. fin support for an action the taxpayer has alreay taken c. oth a an. none of the aove DIFFICULTY: Moerate 7. The final step of the tax research process is to: a. evelop conclusions an recommenations. communicate recommenations c. ocument conclusions an recommenations. litigate the tax-relate ispute 8. Which of the following statements is CORRECT regaring online tax research? a. The metho of constructing queries is the same for all ataases.. Most online tax services allow the use of connectors an wil cars. c. If a query generates too little information, the researcher shoul a more unique keywors.. All of the aove are correct. DIFFICULTY: Moerate Powere y Cognero

3 9. Tax research issues can e ivie in two main categories. These are: a. fact an law issues. primary an seconary issues c. major an minor issues. internal an external issues e. tax an nontax issues a DIFFICULTY: Moerate 10. Which of the following are asic connectors you can use to construct a search query? a. google. not c. or. * e. only an c e DIFFICULTY: Moerate 11. Which of the following represents a law issue? a. intent of the transaction. efinition of a term use in the coe c. ate of transaction. location of the transaction e. all of the aove 12. The amount of a transaction represents a: a. law issue. social issue c. fact issue. political issue c Powere y Cognero

4 13. Which of the following is an example of seconary authority? a. tax treaties. tax journals c. U.S. Constitution. tax laws y Congress DIFFICULTY: Moerate 14. A statutory source of Feeral tax law is: a. various rulings of the Treasury Department an the IRS. collecte rulings of the various courts on Feeral tax matters c. textooks. tax treaties DIFFICULTY: Moerate 15. Which of the following is an aministrative source of primary authority? a. U.S. Constitution. collecte rulings of the various courts on Feeral tax matters c. revenue rulings. newsletters c DIFFICULTY: Moerate 16. A reference source that enales the researcher to follow the juicial history of court cases is known as: a. a case reporter. a juicial irectory c. the Cumulative Bulletin. a citator DIFFICULTY: Moerate Powere y Cognero

5 17. CCH s annotate, or coe ase commercial tax service is: a. the Unite States Tax Reporter. the Tax Coorinator 2 c. the Stanar Feeral Income Tax Reporter. the Feeral Tax Lirary c DIFFICULTY: Moerate 18. The Tax Management Portfolios are pulishe y: a. CCH. RIA c. Bureau of National Affairs (BNA). LexisNexis c DIFFICULTY: Moerate 19. Once the research question has een state, the researcher must next: a. gather the facts. ientify the keywors c. select a ataase an execute the search. interpret an refine the search DIFFICULTY: Moerate 20. Seconary sources are useful when: a. conflicting primary authority exists. the issue is a close-fact prolem c. a researcher oes not have access to primary sources. when a researcher isagrees with the client a DIFFICULTY: Moerate Powere y Cognero

6 21. The IRS wesite can e use to perform which of the following tasks: a. otain ownloaale forms. keywor search IRS tax pulications c. file your tax return. all of the aove 22. Which of the following statements is INCORRECT regaring the CPA exam: a. The National Association of State Boars of Accountancy aministers the test.. Each state has its own test. c. CPA exam caniates must pass all four sections of the exam.. The Regulation section requires tax research. 23. Which of the following forms the asis for all tax provisions? a. seconary authority. the aministrative authority of the IRS c. juicial interpretation of the law. the statutory authority of Congress DIFFICULTY: Moerate 24. The istinction etween primary an seconary authority is important for which of the following reasons? a. to meet the accuracy threshol of sustantial authority.. to avoi penalties uner Section 6662 of the Coe. c. to search properly with connectors an wilcars.. only a an DIFFICULTY: Moerate Powere y Cognero

7 25. Tax journals perform which of the following functions: a. offer researchers expert analysis of unclear tax issues. keep researchers aware of current evelopments c. suggest tax planning techniques. all of the aove 26. Skille tax research requires a comination of reasoning an creativity A tax researcher can rely on tax journals as sustantial authority uner Section 6662 of the Coe The tax research process shoul e approache in a structure, step-y-step manner After the researcher has locate authority that eals with the client's prolem, he or she must evelop conclusions an recommenations.. DIFFICULTY: Moerate Powere y Cognero

8 30. A tax researcher shoul ignore the personal preferences of a client an concentrate only on minimizing the client s tax liaility If a computer search generates too much information, the research may use fewer liraries or more unique keywors Wilcars such as an asterisk can e use to search for wor variations in most tax services Topical tax services are arrange y suject as efine y the pulisher's eitorial staff Westlaw is an example of an online, free tax-relate internet site.. RATIONALE: FEEDBACK: Westlaw is a commercial, suscription law lirary online with extensive tax an other legal an usiness information ataases. Powere y Cognero

9 35. The power of Congress to implement an collect taxes is summarize in the Internal Revenue Coe, the official title of U.S. tax law Tax researchers shoul not consier the client s potential liaility in etermining how much time to spen on a client s prolem.. RATIONALE: FEEDBACK: The researcher has an oligation to a client not to waste the client s money on a low cost/enefit issue. 37. The Tax Aviser journal is pulishe y the AICPA Thomson Reuters Checkpoint is a we-ase tax research service that contains research material on Feeral, state, local, an international taxation.. DIFFICULTY: Moerate 39. The Parker Tax Pro Lirary (PTPL) is esigne as a low-cost tax service for practitioners proviing tax avisory an compliance services.. DIFFICULTY: Moerate Powere y Cognero

10 40. The search stock or securities woul fin ocuments that contain oth the term stock an the term securities.. RATIONALE: FEEDBACK: This search woul fin ocuments that have either the wor stock or the wor securities. 41. The IRS wesite is a full-service, tax research resource.. RATIONALE: FEEDBACK: The IRS wesite, while containing much useful information, is not a full-service tax research resource. 42. One of the issues a tax researcher shoul e concerne aout is how efinitive a research result must e The CPA exam is prepare y the AICPA All primary source material has the same preceential value.. RATIONALE: DIFFICULTY: Moerate FEEDBACK: Different types of primary authority have ifferent value as preceent. The researcher must unerstan the hierarchy of primary sources. Powere y Cognero

11 45. The U.S. Constitution is a statutory source of tax law List in sequential orer the major steps involve in the tax research process. The tax research process can e roken own into six major steps, each an essential part of the overall research methoology. The steps in tax research are as follows. o Estalish the facts o Ientify the issues o Locate authority o Evaluate authority o Develop conclusions an recommenations o Communicate the recommenations DIFFICULTY: Moerate 47. Explain the ifference in primary an seconary sources of tax information an give several examples of each. DIFFICULTY: Challenging Primary authority consists of original pronouncements that come from government sources, incluing statutory, aministrative, or juicial sources. Statutory authority comes out of the legislative ranch of government, the U.S. Congress, an inclues the Internal Revenue Coe, legislative history, an tax treaties. Aministrative ocuments come out of the IRS, incluing regulations, rulings, taxpayer pulications, an other guiance ocuments. The juiciary releases court opinions which are a juicial primary source. Seconary sources consist of interpretations of primary authority an are an unofficial source of tax information. Seconary authority inclues tax services, journals, textooks, treatises an newsletters. Powere y Cognero

12 48. List the significant tax facts that often influence the client's situation: Significant facts that often influence the client s situation inclue the following: The client s tax entity, for example, iniviual, corporation, or trust. The client s family status an staility. The client s past, present, an projecte marginal tax rates. The client s place of legal omicile an citizenship. The client s motivation for the transaction. The relationships among the client an other parties who are involve in the transaction. Whether special tax rules apply to the taxpayer ue to the type of usiness in which the taxpayer is engage (i.e., he or she is a farmer, fisherman, or long-term contractor). Whether the transaction is propose or complete. DIFFICULTY: Challenging 49. Tax research has een escrie as an iterative process. Explain what this means to the researcher give an example of how this process might work with a hypothetical client. The process of tax research is iterative in the sense that, once an answer is foun, it often causes a new issue to appear, which then requires the gathering of more information. After the researcher has more information, he or she has to go ack to the research materials to reevaluate the prolem. For example, if a client comes in asking if they can euct alimony, the researcher can look up the general feeral tax rules for alimony. When looking at those rules, the researcher fins that the alimony must e mae uner a ivorce or separation instrument. When the researcher goes ack to the client to question the client aout the etails of the ivorce instrument, the client explains that it was not a ivorce, ut an annulment. Now the researcher must go ack an research the issue of whether an alimony euction is allowe for payments mae uner a ecree of annulment. The researcher then fins that if an annulment has the same effect for support purposes as a ivorce uner local law, payments uner an annulment ecree qualify as euctile alimony. DIFFICULTY: Challenging In conclusion, the tax research process is not a linear process. Rather, the irection the research takes is epenent on how the facts an issues evelop as the researcher gathers more information. Powere y Cognero