Chapter 2 MC

Question 1

Which of the following statements concerning a taxpayer who wishes to contest a statutory notice of deficiency assessed against him is correct?

Answer 1

He may petition the U.S. Tax Court to hear his case without prepaying the deficiency but is not entitled to a jury trial.

Question 2

In which of the following courts may a taxpayer petition for redetermination of an assessed income tax deficiency and receive a jury trial?

Answer 2

U.S. District Court

Question 3

Which of the following statements correctly describe(s) a function of the federal income tax system? I. It can be used to reduce inflationary trends. II. It can be used to encourage economic activity at the taxpayer level.

Answer 3

C) Both I and II

Question 4

A U.S. Supreme Court interpretation of tax law is the law of the land until which of the following happen(s)? I. Congress enacts a new statute, tantamount to overturning a Court decision. II. The Court overrides its own prior decision.

Answer 4

Both I and II

Question 5

Which of the following statements concerning sources of tax law is (are) correct? I. The IRS is bound to follow a decision of the Tax Court in subsequent cases involving the same issue. II. A two-thirds majority of both houses of Congress is needed to override the President’s veto of a tax bill.

Answer 5

(B) II only

Question 6

All the following statements concerning IRS revenue rulings are correct EXCEPT

Answer 6

They have the force and effect of law and must be followed by the courts.

Question 7

All the following statements concerning the private rulings issued by the IRS are correct EXCEPT

Answer 7

They can be used as precedents by taxpayers in general