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Regulation > 13.2 - Tax Procedures > Flashcards

13.2 - Tax Procedures Flashcards

1
Q

Tax Prepayments:

What percentage is the Internal Revenue Code structured to obtain for final tax purposes and by what means?

A

90% through withholding and estimated tax payments

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2
Q

Tax Prepayments:

How often are tax payments required to be made if not subject to withholding?

A

Quarterly

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3
Q

Tax Prepayments:

By what date(s) must taxpayers make tax payments if they are not subject to withholding?

A
  • April 15th
  • June 15th
  • September 15th
  • January 15th of the following year
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4
Q

Tax Prepayments:

Identify 4 examples of tax prepayments

A
  • Overpayment of tax in a prior year
  • Amount withheld by an employer from wages
  • Direct payment by the individual
  • Excess FICA withheld
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5
Q

Quarterly Installment Prepayments:

When are taxpayers allowed to annualize tax?

A

when income is uneven

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6
Q

Quarterly Installment Prepayments:

Quarterly tax payments must be 25% of the least of???

A
  • 100% of PY tax if return was filed or 110% if AGI > $150k
  • 90% of CY tax
  • 90% of annualized CY tax
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7
Q

Quarterly Installment Prepayments:

Identify the formula used to calculate quarterly tax

A

Regular Tax

+ Alternative Minimum Tax

+ Self Employment Tax

+ Household Employee Tax

= Quarterly Tax

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8
Q

Estimated Tax Penalty

When is the estimated tax penalty imposed?

A
  • Imposed if the total of estimated tax payments is less than 25% of the required minimum
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9
Q

Estimated Tax Penalty

Calcualte the estimated tax penalty

A

Federal Short term rate

+ (3% * Underpayment)

= Estimated Tax Penalty

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10
Q

Estimated Tax Penalty

How often is the estimated tax penalty calculated or determined?

A
  • Penalty determined each quarter
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11
Q

Estimated Tax Penalty

True or False >>>

The estimted tax penalty is deductible as interest expense

A

False -

  • Not deductible as interest expense
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12
Q

Estimated Tax Penalty

Identify the 3 exceptions to estimated tax penalty

A
  • Actual tax liability is less than $1,000
  • No tax liability incurred in prior year
  • IRS waives it for reasonable cause
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13
Q

Estimated Tax Penalty

Does the automatic extension for filing the return also extend the time to pay taxes?

A

No

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14
Q

Other Penalties:

What are the amount of penalties assessed for failure to file a return?

A
  • 5% per month up to 25% of unpaid liability assessed for failure to file a return
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15
Q

Other Penalties:

What is the minimum penalty assessed for failure to file a return?

A
  • Minimum penalty lesser of:
    • $135
    • 100% tax due
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16
Q

Other Penalties:

How much is the penalty for failing to pay tax due?

A
  • 0.5% per month (or fraction of a month) up to 25% of unpaid liability for failure to pay tax
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17
Q

Other Penalties:

At what point is the failure to pay penalty calculated?

A
  • Failure to pay penalty is calculated from date liability is due
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18
Q

Other Penalties:

Can failure to pay penalty offset failure to file penalty?

A

Yes

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19
Q

Other Penalties:

How can the failure to pay penalty be avoided?

A
  • Failure to pay penalty may be avoided by timely filing an extension request and paying a portion of estimated tax due
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20
Q

Filing Requirements

Identify the 3 filing requirements

A
  • Gross income above a certain threshold
  • Net earnings from self-employment are $400 or greater
  • Dependent with gross income in excess of the STD deduction or unearned income over $1,050
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21
Q

Due Dates / Extensions:

When are individual returns due?

A
  • April 15th for calendar year taxpayers
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22
Q

Due Dates / Extensions:

What form must individuals file for an automatic 6 month filing extension?

A

Form 4868

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23
Q

Due Dates / Extensions:

When are tax returns due for individuals who filed an extension?

A

October 15th

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24
Q

Due Dates / Extensions:

When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2016 - 2025?

A
  • April 15th filing due date
  • 4th month after fiscal year end
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25
Q

Due Dates / Extensions:

When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2016 - 2025 if the corporation file for a 5 month extension?

A
  • Extension: September 15th due date
    • Due 9 – months after fiscal year end
    • 5 – month extension granted
26
Q

Due Dates / Extensions:

When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for tax years 2026 if the corporation file for a 6 month extension?

A
  • Extension: October 15th due date
    • Due 10 – months after fiscal year end
    • 6 – month extension granted
27
Q

Due Dates / Extensions:

When are C - Corporations with a calendar / December 31st fiscal year end tax returns due for 2026 tax year?

A
  • April 15th filing due date
  • 4th month after fiscal year end
28
Q

Due Dates / Extensions:

When are C - Corporations with a June 30th fiscal year end tax returns due for tax years 2016 - 2025?

A
  • September 15th filing due date
  • 3rd month after fiscal year end
29
Q

Due Dates / Extensions:

When are C - Corporations with a June 30th fiscal year end tax returns due for tax years 2016 - 2025 if a 7 - month extension is filed and granted?

A
  • Extension: April 15th due date
    • Due 10-months after fiscal year end
    • 7 – month extension granted
30
Q

Due Dates / Extensions:

When are C - Corporations with a June 30th fiscal year end tax returns due for 2026 tax year?

A
  • October 15th filing due date
  • 4th month after fiscal year end
31
Q

Due Dates / Extensions:

When are C - Corporations with a June 30th fiscal year end tax returns due for 2026 tax year if a 6 - month extension is filed and granted?

A
  • Extension: April 15th due date
    • Due 10 – months after fiscal year end
    • 6 – month extension granted
32
Q

Due Dates / Extensions:

What is the return due date and extension due date for corporations with other fiscal years outside of the calendar or June 30th fiscal year end?

A
  • Return due in the 4th month after close of fiscal year
  • Extension: due 10th month after close of fiscal year
33
Q

Due Dates / Extensions:

When are returns due for S - Corporations?

A
  • Returns are due no later than the 15th day of the 3rd month of the year
    • March 15th for calendar year taxpayers
34
Q

Due Dates / Extensions:

What form must S - Corporations file for an automatic 6 - month extension?

A
  • Automatic 6-month extension available for corporate returns by filing Form 7004
35
Q

Due Dates / Extensions:

What is the extended due date for S - Corporations who file for an automatic 6 - month extension?

A
  • Extends the deadline to September 15th for calendar year taxpayers
36
Q

Due Dates / Extensions:

When are partnership and trust tax returns due?

A
  • Must be filed by the 15th day of the 3rd month of the year
    • March 15th for calendar year taxpayers
37
Q

Due Dates / Extensions:

What form must partnerships and trusts file for an extension request?

A

Form 7004

38
Q

Due Dates / Extensions:

How long are due dates extended for partnerships and trusts who file for an extension?

A

automatic 6 - month

39
Q

Due Dates / Extensions:

What is the extended due date for partnerships and trusts who file for and is granted an extension?

A
  • Extends deadline to September 15th for calendar year taxpayers
40
Q

Due Dates / Extensions:

What is the filing due date for the filing of information returns by exempt organizations?

A
  • File information returns by 15th day of the 5th month following close of taxable year
    • May 15th for calendar year entities
41
Q

Due Dates / Extensions:

What form must exempt organizations file to request an automatic 6 - month extension for filing their informational return?

A

Form 8868

42
Q

Due Dates / Extensions:

What is the filing due date for estate and trust tax returns?

A
  • Filed by 15th day of the 4th month following close of tax year
    • April 15th for trusts and calendar-year estates
43
Q

Due Dates / Extensions:

What form must estates and trusts file to request an extension to file ?

A

Form 7004

44
Q

Due Dates / Extensions:

How long is the automatic extension for etates and trusts who request an extension to file?

A

5 1/2 months

45
Q

Disclosure of Tax Positions:

When might accuracy related penalties be avoided?

A
  • if return position adequately disclosed and has a reasonable basis
  • understatement is due to substantial authority
    • Substantial authority depends on the facts & circumstances
46
Q

Disclosure of Tax Positions:

How much is the accuracy related penalty?

A
  • Penalty = 20% of the underpayment
47
Q

Disclosure of Tax Positions:

Is the accuracy related penalty figured on any part of an underpayment on which the fraud penalty is charged?

A

No

48
Q

Disclosure of Tax Positions:

What is a substantial understatement?

A

larger of 10% of correct tax or $5,000

49
Q

Disclosure of Tax Positions:

Give 6 examples of items that represent substantial authority?

HINT: CRTRII

A
  • Court opinions
  • Revenue rulings
  • Treasury regulations
  • Revenue procedures
  • IRS notices & announcements
  • IRB publishings
50
Q

Claim for Refunds

How long are taxpayers required to retain records?

A
  • Must maintain records as long as the contents may be material in administration of any internal revenue law
  • Retain 3-7 years
51
Q

Claim for Refunds

What form is used to claim a refund if it not for a current year refund (Form 1040) or prior year refund (Form 1040X)?

A

Form 843

52
Q

When must a taxpayer file for a claim for refund?

A
  • Must be filed by the later of 3 years from the filing of the return or 2 years after the tax was paid
53
Q

Claim for Refunds

What is the statute of limitations for filing a claim for refunds when having worthless securities or bad debts?

A

statutue of limitations extended to 7 years

54
Q

IRS Statute of Limitations:

What is the IRS statute of limitations for tax return assessments?

A
  • Assessment limited to 3 years from later of return due date or filing date
55
Q

IRS Statute of Limitations:

When is the IRS statute of limitations for assessments extended and for how long is the extension?

A
  • Assessment period extended to 6 years in the case of gross omission
  • gross omission = in excess of 25% of gross income
56
Q

IRS Statute of Limitations:

True or False >>>

Gross omission = 50% of GI stated in the return

A

False - 25% of GI stated in the return

57
Q

IRS Statute of Limitations:

What items are counted in the assessment of gross omission on a tax return?

A
  • Only items completely omitted from the return are counted
58
Q

What is the IRS statute of limitations for the assessment period in the case of a nonexistent or fraudulent return?

A
  • Assessment period unlimited in the case of a nonexistent or fraudulent return
59
Q

When will the IRS issue a release of the notice of federal tax lien once it has been filed?

A

within 30 days after the tax due has been satisfied

60
Q

What does gross income mean for a trade or business?

A

Total of the amounts received from the sale of goods before deductions and cost of goods sold

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