ITX - 33 Flashcards
Personal exemption amount per person
$3950
You must file a tax return for any year in which your gross income exceeds?
The standard deduction amount plus the applicable personal exemption amount
Federal tax filing date: individual returns
File by April 15th (15th Day of the fourth month after the year ends)
Federal tax filing date: Corporation returns
File by 15th day of the third month after the tax year ends
Federal tax filing date: partnership returns, trusts, and estates
File by 15th day of the fourth month after the tax year ends
Federal tax filing date: estimated tax payments are paid in four installments
April 15
June 15
September 15
January 15
Federal tax filing date: Extensions for individuals
6 months until October 15th
Federal tax filing date: Extensions for corporations
6 months after the original due date
Federal tax filing date: Extensions for partnerships
5 months after the original due date
Failure to file any tax return: the penalty is___. The maximum penalty amount is___.
5% per month (or fraction thereof) during which a return is not filed
25% of the tax due
Individual: If the tax return is more than 60 days late, the penalty will not be less than the lesser of___.
$135 or 100% of the tax due
Taxes: Which entity qualifies for an automatic six-month extension for filing returns from time for filing due date? Which entities must file an application for extension in order to qualify for an automatic six-month extension for filing returns from time for filing due date, if filed by the original return due date?
- Corporations
- Individuals, trusts, and estates
The tax penalty for failing to file S corporation or partnership returns on time is___.
$195 per quarter or shareholder per month or part of a month that the failure continues (up to maximum of 12 months)
Amended income tax returns are filed on___.
Form 1040X
Amended returns: the general limitations period on assessments is___from the date the return was filed.
Three years
Who can represent clients before the IRS? Who can represent clients before the Tax Court?
Attorneys, enrolled actuaries, CPAs, and enrolled agents
Attorney and CPAs
A client must designate a representative in dealing with the IRS by using Form___.
2848
Tax Audit: A taxpayer must provide a power of attorney (Form___) for representation in the absence of the taxpayer.
2848
Appeals from assessments: either the disagreement will be settled at the supervisor level, or the IRS will send a___.
30-day letter
The statute of limitations on unfiled tax returns is___years. If the tax liability was understated by___, the statute of limitations extends to___years, and if fraud is shown, there is no statute of limitations.
3
25%
6
A disagreement with the findings on a 30-day letter may be appealed to the___.
IRS office of appeals
Taxpayers who disagree with the result of an audit conference or notice of deficiency have___days (___days if their address is outside the US) from the date of the letter or the conference to appeal to the US Tax Court.
90
150
The main advantage of taking the case to the Tax Court is?
The taxpayer does not have to first pay the outstanding tax liability in dispute
If the tax payer wants a jury trial, this will take place at the?
District Court
Alternative routes for appeal involve payment of the amount in dispute and then filing for a tax refund in the ___, if the taxpayer paid the taxes and the IRS denied the refund claim.
US District Court or the US Court of Federal Claims
A taxpayer who prevails in court proceedings may collect reasonable litigation costs, including attorneys fees (___per hour) from the IRS if all alternatives exhausted prior to litigation, and the litigation was not unduly postponed by the taxpayer. A request for these costs must be filed within___days of the final determination of tax liability.
$190
90 days
A penalty of___(or, if greater, 50% of preparer’s fee) per incident may be assessed against a tax preparer who takes an unrealistic position on a tax issue, which results in an understatement of tax liability. This penalty increases to___ (or, if greater, 50% of preparer’s fee) if the tax preparer acted willfully. The___penalty is also assessed against those promoting abusive tax shelters.
$1000
$5000
$5000
Misuse of confidential information in relation to tax return information and preparation, the IRS can assess up to___per disclosure (maximum of___per year). If done recklessly, a planner could face a jail sentence.
$250
$10,000
When professionals knowingly prepare returns with the intent to deceive and derive benefit from these fraudulent returns, they may be prosecuted criminally, with penalties up to ___ per return.
$100,000
A professional preparing a tax return for a client who fails to follow the three procedures can result in fines___per incident.
$50
The penalty is 20% of the understatement of tax if the discrepancy is due to the client’s:
1) disregard of tax rules
2) substantial understatement of income tax (more than either 10% of the tax shown on the return or $5000 – whichever is greater)
3) substantial valuation misstatement (150% or more of the determined amount)
The penalty for fraud is ___ of the understatement attributable to the fraud and takes the place of the accuracy-related penalty.
75%
Decisions of the tax court and the District Court may be appealed to the___.
Circuit court of appeals
The only appeal from the appeals court is the ___.
Supreme Court
Taxes: failure to file timely applies to___, not to___.
Individuals and corporations
S corporations or partnerships
Interest and penalties: failure to pay
1/2% of tax due per month; maximum of 25%
Interest and penalties: negligence or understatement (“accuracy-related”)
20% of understatement
Interest and penalties: failure to file timely
5% of tax due per month, maximum of 25%; minimum penalty if over 60 days late
Interest and penalties: Fraud
75% of understatement
Interest and penalties: underpayment
Interest (not penalty) is keyed to the short-term federal rate
For dependent children, a return must be filed if there is any ___ income and gross income exceeds $___, or if there is only earned income and it excess___.
unearned
$1,000
the standard deduction amount for single taxpayers
Any taxpayer with $___ or more of self-employment income must file a return.
$400
