R4 M2- Professional Responsibilities & Tax return preparer Pen.

Question 1

What is the fine for failure to file?

Answer 1

The fine is $60 for each failure, with a maximum of $31,500 fir each return period.

Question 2

When a person (individual, trust, estate, partnership association, company, or corporation) who employed a tax return preparer during the return period must send what to the IRS?

Answer 2

return containing the name, taxpayer identification number or Social # and place of work for each tax return employed

Question 3

What is a tax return preparer?

Answer 3

A tax return preparer is any person who prepares tax from compensation.

Question 4

Which of the following is an unreasonable position as defined by the Internal Revenue Code?
A. There is substantial authority for the position, and it does involve a tax shelter. It does not appear that there is a more likely than not chance that the position will be sustained on its merits.
B. The position involves a tax shelter and there is a more likely than not chance that it will be sustained on its merits.
C. There is substantial authority for the position, and it does not involve a tax shelter or reportable transaction.
D. The position is disclosed, there is a reasonable basis for it, and it does not involve a tax shelter or reportable transaction.

Answer 4

Choice “A” is correct. Generally, a position that has substantial authority will not be an unreasonable position. However, because this involves a tax shelter and there is not a more likely than not chance that it will be sustained on its merits, it will be deemed to be an unreasonable position.

Choice “B” is incorrect. This position involves a tax shelter. It does meet the threshold of more likely than not that it will be sustained on its merits. Therefore, it will not be deemed to be an unreasonable position.

Choice “C” is incorrect. This position has substantial authority and does not involve a tax shelter or reportable transaction. Therefore, it will not be deemed to be an unreasonable position. Note that it is irrelevant whether this type of position is disclosed or not.

Choice “D” is incorrect. A disclosed position that has a reasonable basis and does not involve a tax shelter or reportable transaction will not be deemed to be an unreasonable position.