REG - 2

Question 1

SSTS No. 2 - when is omission of an answer permitted

Answer 1

only if both (a) the information is not readily available, and (b) the answer is not significant in terms of taxable income or loss, is omission of an answer permitted.

Question 2

SSTS No. 1

Answer 2

obligation to warn clients about tax return consequences.

Question 3

Do business travel expenses require documentation?

Answer 3

Yes. And if a CPA acting as a tax return preparer does not inquire as to whether that documentation exists before claiming the deduction, may be punished.

Question 4

Reasonable Basis Test

Answer 4

x

Question 5

Substantial Authority Test

Answer 5

x

Question 6

In responding to Enron-era frauds, SOX…

Answer 6

• strengthened criminal penalties for securities fraud
• Restricted provision by auditors of public companies of nonaudit services
• Created the PCAOB

SOX did NOT require the rotation of audit firms every seven years, only of the audit engagement partner, the reviewing partner, and some other key partners.

Question 7

Can a RICO civil suit be brought before the defendant has been criminally convicted under RICO?

Answer 7

NO.

When a RICO claim is predicated upon claims of securities fraud, as here (since these bogus strategies involved options, warrants, and shares of stock), no RICO civil suit can be brought until defendant has been criminally convicted. That is not true of any of the other RICO “predicate acts,” but it is true of securities fraud.

Question 8

What is the essence of a mail fraud violation?

Answer 8

That defendant be involved in a fraudulent scheme for which sending a letter through the mail is an essential part

Question 9

S7525 of the IRC

Answer 9

extends a modest testimonial privilege to clients of all tax advisers authorized to practice before the IRS, including accountants. However, the privilege has several exceptions and has been construed narrowly by the courts.

The privilege does not apply to:

a. Criminal matters
b. Matters not before the IRS or federal courts in cases brought by or against the United States
c. Tax advice on state or local matters
d. Written advice in connection with promotion of a tax shelter

Question 10

Do state privilege statues apply in the state courts in the particular state?

Answer 10

No. State privilege statues apply only in the state courts in the particular state.

Question 11

Cosigner

Answer 11

Assures a bank that a loan will be repaid if the debtor is unable to do so for any reason, including bankruptcy.

If the loan is repaid in full by any party, the obligations of those liable for repayment are discharged

Question 12

Purpose of a bank recording a mortgage

Answer 12

Keep the rights of the original parties intact and protect against future transfers or recorded rights

Question 13

Quitclaim deed

Answer 13

transfers whatever title the grantor has and there are no warranties, so the grantor may not hold any title

Question 14

Bargain and sale deed

Answer 14

special warranty deed that has the same provisions as a special warranty deed. It is limited in its time of protection

Question 15

Special warranty deed

Answer 15

Limited in time for its protection. The guarantee of title is only for the time that the grantor owned the property

Question 16

General warranty deed

Answer 16

Gives the grantee/transferee the best protection on title

Question 17

Fee simple estate

Answer 17

gives the owner the right to sell, will, mortgage, and lien the property. It is the highest form of land ownership

Question 18

Easement by implication

Answer 18

Provides a limited use and limited duration form of ownership. An easement is a right of use but does not include the right to transfer title to the land on which the easement is located.

Question 19

Life estate

Answer 19

lasts only for the length of the grantee’s life and ends automatically upon his or her death

Question 20

Non freehold estate

Answer 20

a lesser estate such as a lease or an interest that is limited in time