Gleim 3

Question 1

To avoid the penalty for underpayment of estimated tax - individual

Answer 1

AGI 150k rule
Must pay 110% of prior year instead of 100% or
90% of current year

Under 149k
Must pay 100% of prior year or
90% of current year

Question 2

3 year statute of limitations on additional tax assessments apply?

Answer 2

A taxpayer inadvertently overstates deductions equal to 15% of gross income

Unlimited - NO RETURN is filed
Unlimited - evade taxi in filing income tax returns

Question 3

When a taxpayer needs guidance with a specific tax issue related to a proposed transaction, the taxpayer can ask the IRS for ?

Answer 3

A private letter ruling - it is limited to that taxpayer

Question 4

Head of household filing status example?

Answer 4

A single taxpayer maintains a separate home for his parent, who qualifies as a dependent

Question 5

An individual qualifies for head of household status if (s)he satisfies conditions with respect to

Answer 5

Filing status. The individual may not file as a qualifying widow(er).
Marital status. A married individual who lives with a dependent apart from the spouse qualifies for head of household status if, for the tax year,
(S)he files separately;
(S)he pays more than 50% toward maintaining the household; and
For the last 6 months,
The spouse is not a member of the household,
The household is the principal home of a child of the individual, and
The individual can claim the child as a dependent.
Household maintenance. To qualify for head of household status, an individual must maintain a household that is the principal place of abode for a qualifying individual for at least half of the tax year.
Therefore, a single taxpayer whose spouse died in the preceding tax year and who has a dependent child living in the household qualifies for, and would file as the more beneficial status of, qualifying widow(er), and does not qualify to file as head of household.

Question 6

How many years to claim refund on worthless securities?

Answer 6

7 years

Question 7

The penalty for failure to pay tax is 0.5% of the amount due for each month (or fraction thereof) during which such tax remains unpaid. The maximum penalty under this provision is 25% (Sec. 6651). Mr. Johnson’s failure to pay penalty is computed as follows:

Additional tax due on return
$5,000
Penalty rate per month
× .005
Penalty for 1 month
$ 25
Number of months past due
× 2
Failure to pay penalty
$ 50

Answer 7

Failure to pay example

Question 8

Excluded revenue received from cash customer. If found guilty of fraud may be subject to : (3)

Answer 8

Being held responsible for the costs of prosecution
a fine not more than 250,000
imprisonment for not more than 5 years
other penalties as provided by law

Question 9

Adjustment to prior returns of past 5 years - is that allowed?

Answer 9

The statute of limitations on a typical adjustment to a return is 3 years following the date the return is file. Several years have expired. However, some of the adjustments are permissible.

Question 10

Supporting a Family member as a dependent salary limit?

Answer 10

$4,400 in 2022

Question 11

A statutory notice of deficiency explains that the taxpayer has 90 days to either pay the deficiency or else to file a ?

Answer 11

Petition with the US TAX Court

NOT US district court
NOT protest and request with an appeals officer - can only do this after receiving the 30-day letter, not after receiving the statutory notice of deficiency

Question 12

The IRS may assess additional tax up until which date?

Answer 12

April 15, year 3
3 years from The date from which the return was filed

Question 13

A calendar-year C corporation received an automatic extension of time for filing its Year 1 return by submitting an application on Form 7004. On what date is the corporation’s return due?

Answer 13

A C corporation must file its return on or before the 15th day of the 4th month following the close of the tax year. For a calendar-year-end corporation, the due date for a tax return is 4/15/Yr 2. By filing Form 7004, the corporation receives an automatic 6-month extension for filing the tax return, which moves the due date to 10/15/Yr 2. However, the corporation must pay its estimated tax liability by the original due date. The time for payment of the taxes is not extended.

Question 14

Who can’t be dependents?

Answer 14

Spouses are not classified as dependents
no cousins either

Uncle can be claimed as dependent

Question 15

Statute of limitations changes from 3 years to how many if it effects an omission of more than 25% gross income stated on the return?

Answer 15

double to 6 years

Question 16

Which of the following is a list of courts that are referred to as courts of original jurisdiction, or trial courts, for tax matters?

Answer 16

The Tax Court, the U.S. District Court, and the U.S. Court of Federal Claims.