FC 2

Question 1

What purpose do letters of credit serve?

Answer 1

to ensure performance and payment under a contract

Question 2

list basic characteristics of a letter of credit

Answer 2

1. issued in any form that is a record
2. consideration not required to issue
3. can be revocable (international irrevocable)
4. letter expires one year after date of issue - 5 years if time is perpetual

Question 3

what are the requirements for transferring a letter of credit?

Answer 3

1. can’t unless stated in letter

2. proceeds from letter are assignable

Question 4

Describe what happens if a bank ignores the requirements for payment on a letter of credit

Answer 4

bank is liable for any damages because it cannot vary the terms of the letter of credit

Question 5

What is Circular 230?

Answer 5

The DOT rules of practice that cover CPAs and others who practice before the IRS.

Question 6

Identify elements of impermissable fee as described in Circular 230

Answer 6

1. Unconscionable

2. Contingent

Question 7

List general requirements of IRS practitioners as highlighted in Circular 230

Answer 7

1. Furnishing requested info promptly
2. Exercising Due Diligence
3. Not unreasonably delaying IRS matters
4. Not providing assistance in practicing to persons disbarred or suspended by IRS

Question 8

List components of IRS best practices as outlined in Circular 230

Answer 8

1. communicate clearly with client
2. establish facts
3. relate applicable law
4. advise client regarding consequences

Question 9

list types of covered opinions outlined n circular 230

Answer 9

1. Tax avoidance transactions
2. transactions with principal purpose of avoiding ta
3. 4 categories of transactions with significant purpose of avoiding tax.

Question 10

Explain when creditor has temporary perfection

Answer 10

Debtor moved to another state

- creditor has 4 months or perfection in new state

Question 11

Describe possession as means of perfection

Answer 11

Instruments can be perfected by possession; creditor can be in possession by controlling when title can be passed (field warehousing)

Question 12

Describe filing locations

Answer 12

Central (state level) except for fixtures and crops ( local with property records)

Question 13

Describe financing statement

Answer 13

Document that is filed
needs adequate description
names of debtor and secured party

Question 14

List 2 solutions in which perfection by attachment is automatic upon creation f security interest

Answer 14

1. Purchase money security interest in consumer goods

2. Security interest created by assignment

Question 15

Define Perfection

Answer 15

Means by which secured party gains priority to a debtors collateral over other 3rd parties who also claim to have an interest in same collateral.

Question 16

List methods of perfection

Answer 16

1. Attachment ( auto upon creation of security interest)
2. Possession - control
3. Filing
4. Automatic
5. Temporary

Question 17

What does the BSA require of tax payers?

Answer 17

to report foreign bank accounts

Question 18

GAPP

Answer 18

Generally Accepted Privacy Principles

Question 19

2 actions that are punishable conditions under S7216 if Internal Revenue Code

Answer 19

1. disclosing any info obtained in preparation of tax return

2. using info for any purpose other than to prepare a return

Question 20

6 conditions under which disclosure of client info is acceptable

Answer 20

1. client consents
2. GAAP calls for disclosure
3. Enforceable summons
4. Ethical examination
5. Peer review
6. to others in firm on a “need to know” basis

Question 21

list exceptions to a practitioner’s privilege as outlined in IRC S7525

Answer 21

1. criminal matters
2. US Matters not before IRS or federal courts
3. state or local tax matters
4. written tax shelter advice

Question 22

examples of when evidentiary privilege is not recognized

Answer 22

1. state common law
2. federal common law
3. most state’s statutes

Question 23

to what items do accountant - client privilege apply?

Answer 23

sharing work papers with anyone without client’s permission

may not disclose info obtained during work performed