REG 2.0 Flashcards
How many creditors must join in filing a petition to commence an involuntary bankruptcy
If the debtor has 12 or more creditors, at least 3 creditors with unsecured claims at least $18,600
If the debtor has less than 12, then at least one creditor that has $18,600 of unsecured claims
What is the mailbox rule
Contract is effective when the offeree sends the contract back to the offeror
What are the surety’s rights against the principal
Exoneration - right to compel principal to pay
Subrogation - enforcement of creditors rights against principal
Reimbursement - right to receive from principal after surety pays
What is the parol evidence rule
Basically states that prior or contemporaneous oral statement’s and prior written statements to adjust the terms of a contract are inadmissible
What are the elements of a legally enforceable contract
CO AXL
Capacity (competent and adult)
Offer
Acceptance
X-change consideration
Legal
What are the types of defenses used by the defrauded
DUMIS
Duress
Undue Influence
Mutual mistake or Misrepresentation
Intoxicated
Statute of frauds or limitation
What contracts under the statute of frauds are supposed to be in writing
MY LEGS
Marriage
Year (contracts that can’t be performed within a year)
Land contracts
Executor contracts
Goods (sale of $500 or more)
Surety (to act as)
What defenses render contracts void?
FAPI
Fraud in the execution
Adjudicated incompetency
Physical duress
Illegality
What are express contracts, implied contracts, and quasi-contracts
Express contracts: any contract formed by words - written or oral
Implied contracts - when parties’ assent is inferred by their conduct
Quasi-contract: technically not a contract, but more of a remedy to prevent unjust enrichment
What are the exceptions to the rule that prohibits an accountant from showing workpapers to a third party without client permission
In response to a subpoena
to a prospective purchased of the CPA’s practice
to a state CPA QC review panel
in defense of a lawsuit brough on by a client
in defense of an investigation conducted by the AICPA
When GAAP requires disclosures of such information in the financial statements
What is the difference between fraud and constructive fraud
Constructive fraud is not intentional and is synonymous with Gross Negligence
What are the five elements of fraud
MAIDS
Misrepresentation of material fact
Actual and reasonable reliance by the defrauded party
Intent to induce reliance
Damages
Scienter
What are the elements of negligence
The defendant owed a duty of care
The defendant breached that duty by failing to act with due care
The breach caused plaintiff’s injury and damages
The CPA is liable to the client or foreseeable class of persons the CPA knows will rely on their work unless the the jurisdiction practices ultra mares
What are the standards to consider when disclosing information on a taxpayer’s tax return
Reasonable standard, at least 20% of success
Substantial Authority Standard > 40% of success
More Likely Than not Standard > 50% of success
What are the penalties for: Failure to file, failure to pay, negligence penalty with respect to unsubstantial understatement, and substantial penalty
Failure to file - 5% for each month up to 25% of unpaid tax
failure to pay - 0.5% for each month up to 25% of unpaid tax,
negligence penalty with respect to unsubstantial understatement - 20% of unpaid tax
substantial penalty - 20% of unpaid tax
What is the appeals process
If you don’t agree with the results of the audit,
First, the taxpayer will receive a 30 day letter notifying the taxpayer of the right to appeal. He/she has 30 days to request an appeal from the appeals officer
Second, if agreement has not been reached, the taxpayer will receive a 90 day letter which will state the taxpayer has 90 days to pay or file a petition with the U.S. Tax Court
If the taxpayer wished to litigate, they can take the case up to the U.S. District Court or the U.S. Court of Federal Claims , but they’re dues must have been paid to the IRS prior to doing so.
Remember that the U.S. District Court is the only court to have a jury.
What are the methods used to select a tax return for an audit
Statistical Models - picks them based on which returns are most likely to possess errors
Random Selection
PY audit yielded negative results
Information return discrepancy (W2 or 1099s don’t match the income on the return)
Deductions exceed established thresholds