Enrolled Agent - Travis > Part 3 Section 1 Circular 230 > Flashcards

Part 3 Section 1 Circular 230 Flashcards

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1
Q

Time frame to file a written appeal from being denied by IRS for EA. Q 12 word doc
It’s the same for an appeal. Q 51

A

30 days

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2
Q

An appeal from the initial decision ordering disbarment is made to which agency Q 47 word doc

A

The secretary of the treasury.

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3
Q

How long before a practitioner can apply for reinstatement after being disbarred by the IRS. Q 52 word doc

A

5 years

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4
Q

What is the proceedure for a practitioner to respond to a complaint. Q 53 word doc

A

The administrative judge decides how long. Max of 30 days.

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5
Q

Failure to file an answer to a complaintfiled by IRS for disbarment, by the original or extended deadline constitutes…? Q 54 word doc

A

An admission of the allegations in the complaint and a waiver of a hearing.

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6
Q

Who presides over a hearing on a complaint for disbarment based on a violation of the laws or regulations governing prractice before the IRS. Q 57 word doc

A

Administrative law judge

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7
Q

an attorney has been charged with misconduct by the IRS. Which forms of evidence is he NOT permitted to introduce at the hearing?
Depositions, Exhibits, Letters, or all of these are not permitted. q 58 -60 of google doc

A

Letters are not permitted as evidence.

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8
Q

A notice of disbarment or suspension of a CPA from practice before the IRS is issued to which of the following. q 62 of google doc

A

IRS employees, Interested departments and agencies of the federal government, State authorities

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9
Q

Statement that is true with respect to the contents of an answer that is filed in rebuttal to a complaint filed by IRS q 63 of google doc

A

The respondent may not deny a material allegation in the complaint that the respondent knows to be true, or state that the respondent is without sufficient information to form a belief, when the respondent possesses the required information. Explanation 0- If IRS has reason to believe an agent has violated a law or regulation governing practice before IRS, the IRS may reprimand the agent or institute a proceeding for suspension or disbarment. An answer must be filed in writing within the time specificed in the complaint. The answer must contain a statement of facts that constitute the grounds for defense and specifically admit or deny each allegation set forth in the complaint.

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10
Q

How is a proceeding for violation of the regulations in Crcular 230 instituted against an attorney, cpa ea etc? q 64 google docs

A

The IRS representative signs a complaint naming the individual, and files the complaint with the administrative law judge.

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11
Q

What is the procedure for an EA to repond to a complaint from the IRS

A

Have 30 days or sooner if the administrative law judge requires it. Written response specifically with facts that constitute the grounds for defense and specifically admit or deny each allegation set forth. EA can statement that he lacks sufficient information to form a belief.

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12
Q

Circular 230 provides for all of the following enrolled agent sanctions Except. q 70 word doc. Whic 3 things can circular 230 sanction.

A

Imprisonment. This has to be done through the legal system and federal law.
Circular 230 can impose Monetary penalty, Censure, and Disbarment.

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13
Q

How is discovery initiated regarding complaints for the sanctioning of an employer, firm, or practitioner q 72 word doc

A

The administrative law judge has discretion to permit discovery

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14
Q

The period for the next enrollment cycle for enrolled agents whose social security numbers end in 0,1,2, or 3 will be… q 73 google doc

A

November 1, 2024 through January 31st 2025

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15
Q

Enrolled agents generally must complete continuing education credits for renewed enrollment. What are the requirements? q 74 google docs

A

a minimum of 16 hours must be completed each year of the enrollment cycle.
There is a 72 hour requirement for a 3 year period.

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16
Q

How long must a practitioner maintain records of his or her completed CE credits? q 75 google docs

A

Renewal is conditioned on completing a minimum of 72 hours continuing education credits during the 3-year enrollment cycle, including at least 16 hours in each of the 3 years. Each individual applying for renewal must retain, for a period of 4 years FOUR YEARS following the date of renewal of enrollment, the information required with regard to qualifying continuing education credit hours.

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17
Q

A practitioner has been an EA for a long time. Her SSN ends in 2. When may she destroy records documenting her continuing education from January 2022? q 76 google docs

A

The cycle will end April 1st 2022. The records should be kept for 4 years. 2026 is the final date.

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18
Q

What happens to an enrolled agent who does not meet the CE requirements? q 77 google docs

A

They may be placed on an inactive status for 3 years. (They will not be required to take all three sections)

It is true that the new enrolled agent must complete 2 hours of CE for each month enrolled during the cycle beginning with the month enrolled.

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19
Q

Are renewal fees refundable? Is failure to receive notification from the IRS of the renewal requirement justification to not renew? How is the individual’s renewal cycle determined

A

Renewal fees are non-refundable. Failure to receive IRS notice is not an excuse to not renew. The last digit of the SSN determines which cycle.

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20
Q

What is the tax rate on U.S. sourced income for foreign taxpayers?

A

30%

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21
Q

For residency, what is the substantial presence test

A

31 days during 2024 and
183 days during 2024, 2023, and 2022 counting all days of physical presence in 2024 but only 1/3 the number of days of presence in 2023 and only 1/6 the number of days in 2022

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22
Q

Jean, a citizen and resident of Canada, is a professional hockey player. Earns $68,500. Spends 132 of 165 playing days in the US. What is the amount of his gross income?

A

80% is the prorated ratio. 132/165 = 80%. 80% of $68,500 = $54,800

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23
Q

What is form 8801

A

Credit for prior year minimum tax

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24
Q

Unrelated party trick

A

It says that an uncle is NOT NOT NOT NOT a related party… doesn’t seem right

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25
What is the difference between realized gain and recognized gain in a stock sale between related parties (Person A & B) and then unlrelated parties (Person B & C)
Recognized gain = Person A's basis - sold price from B to C Realized gain = The price B paid A - the price B sold to A Disallowed gain = difference between what A sold to B
26
What are examples of section 1245 property
Furniture Computer software packaging machine NOT 1245 ELEVATOR BECAUSE IT'S ATTACHED TO THE BUILDING AND ISN'T GOING ANYWHERE
27
How does the holding period for a stock sale from a stock that was gifted work?
The holding period is calculated from the date of the GIFT
28
Are the selling expenses paid by a seller included in the adjusted basis to calculate gross profit percentage
YES
29
What are the exceptions that allow a person to exclude the gains on the sale of a personal residence within 2 years of the sales price and how is it calculated
Change in health, employment, of unforseen circumstance. Calculated on a pro rata basis. of months lived in the house / 24 months X GAIN
30
Which accounts meet the IRC reuquirements for an IRA Employer and Employee association trust account Individual Savings Bonds
Savings bonds
31
What are the Traditional IRA Phaseout limits for a single filer covered by an employer plan and MFJ MFS
$77k to $87k Single $123k to 143k MFJ $0 to $10k if MFS
32
What are the Traditional IRA Phaseout limits for a single filer NOT covered by an employer plan and MFJ MFS
IT looks like you can deduct the full $7,000 + $1k catch up no matter how much you make if your employer doesn't offer a plan. $230k - $240k if MFJ and spouse is covered at work.
33
When are RMD required to start?
April 1st after the year the person turns 73.
34
35
What is the gift exclusion amount for 2024
$18,000
36
What are some of the exclusions from the gift tax
Paying direct expenses for someone's College tuition Medical bills Payments to a dependent that can be considered support
37
What is the requirement for reporting gifts of property? IE Cars
A gift of a car is reportable gift with the $18,000 exclusion
38
What is the gift tax filing requirement for gift spliting
Form709, gift tax return, is required when the gift given is over $18,000. For example, Father gives son $24,000 and elects the gift splitting option with his wife. They don't have taxable giving, but they have to file a 709 return
39
What entites are required to fil a 709 Gift tax return
Only individuals are required to file gift tax returns. Corporations and trusts are NOT required to file a gift tax return.
40
What is the non-citizen spouse limitation on gifts
If the spouse is a non-citizen, there is a limit of $185,000 in 2024.
41
Is an interest free loan considered a gift, and how is reported?
Interest free loans are not considered gifts. You report them as interest income on a Schedule B
42
Can a Couple gift split if they give a gift, and then get divorced. One spouse remarries by the end of the year?
No. Divorce = NO GIFT SPLITTING.
43
What are some other rules about gift splitting and divorce
It applies to all the gifts. If gift splitting is elected, all the gifts given in the year must be reported on both 709s. Both spouses have to remain single
44
What does the 50% qualified charity mean?
The donor can deduct up to 50% of their AGI to the charity.
45
What is a QTP and what are the limits
QTP stands for Qualified tuition plan (529 plan) $19,000 per year You can front load or super fund it, by doing 5 years in one year. $90,000 for each spouse. $180,000 for a married couple.
46
How are donations to political parties viewed when it comes to tax deductions and gifts?
They are NOT tax deductible and NOT considered a gift
47
What are some examples of estate tax credits?
Unified Credit, Gift taxes on gifts included in the gross estate and Foreign death taxes
48
Unless an extension is received, when is the estate tax form 706 due
Within 9 months of the decedent's death
49
What are examples of reasonable cause as to why the estate is unable to pay the tax in a timely manner
pending lawsuit Interest rate super high in order to pay the taxes Liquid assets of the estate are located in several jurisdictions
50
In 2024, what is the gross estate value before taxes start
$13,610,000
51
How do yo ucalculate the GSTT (Generation skipping transfer tax) Example X gave 13.61 million and allocates 1,361,000 of GST exemption to this direct skip.
The max fed estate tax rate X the inclusion ratio. The inclusion ratio is calculated by the donor's choice of allocated GST exemption / the total transfer The max federal estate tax rate is 40% of 13.6 million The inclusion rate is 1 - 1,361,000 / 13,610,000 = 90% 13.61 mill x 40% X 90% = 4,899,600 NOTE : the $13,100,000 is the amount given
52
How is the gross valuation determined on an asset held jointly with right of survivorship in which the decedant paid 100% of the purchase price
You mush include 100% of the FMV of the asset.
53
How long can the IRS extend an estate tax return filing? What form is used to file an extension for an estate tax return
up to 10 years. Most of the time it's 12 months Form 4768 (Rake Shave)
54
What are the three exceptions to the GSTT after October 22, 1986?
1. Trust was irrovocable prior to 9-25-1985 2. will executed before 10-22-1986 3. decedant who is mentally incompetent after 10-22-1986
55
Can the estate deduct medical expenses if the medical expenses have already been deducted on the 1040? What deductions can be made
NO Legit deductions include Funeral Expenses and charitable contributions specified in the will.
56
What happens if a life insurance policy's beneficiary is the estate
The face amount of the life insurance is included in the gross estate. It turns out that all life insurance is included in the gross estate, even if the beneficiar
57
How is the GSTT tax imposed
In addition to Gift and Estate taxes.
58
What is thelast day that estat tax may be assessed upon recipients of property from an estate?
The due date is 9 months after the decadents date of death + 3 years. Then another year is added to proprerty transferred to a recipient.
59
How are the taxes paid on a GSTT handled if the estate pays the taxes
The payment of the taxes is considered an additional distribution to the recipient
60
What is a termination transfer in GSTT?
When the person being skips dies
61
How is the holding period of inherited property treated?
Always automatically Long Term Capital Gains
62
What is the tax called when a generation is skipped and a distribution is made to a grandchild while the child is still alive?
Generation-Skipping Distribution tax.
63
Can the alternative valuation method be used if the adjustment increases the value of the estate and the tax liability? Can the alternative valuation election be changed once selected
NO. The adjusment can only be use to decrease the vlaue of the estaet and the liability Once it is elected, it can't be reversed.
64
How many times does GSTT tax get assessed?
Once
65
What happens if an estate elects the alternative valuation method and the house is sold within six months
The value is determined by the sales price.
66
What is the difference between form 706 and 1041 Where are admin and ordinary expenses paid by the fiduciary of an estate
The form 706 reports the gross estate value for estate tax purposes as well as GSTT. The expenses for admin and ordnary paid by the fiduciary are always reported on the 706 The form 1041 reports the income that the estate generates after death.
67
How is a grant to a foreign student (Non-resident alien) for foreign work treated
Not taxable
68
What are the time restrictions for a person to file 8379 - injured spouse
2 years from the date the tax was paid or 3 years from the filing date. (Same as normal)
69
Which of these items is important for preparing a current year tax return (What imformation is important from a prior year tax return) State Income tax refund AMT for credit AGI Gain (loss) carryover
AGI is NOT NEEDED. THE OTHERS ARE.
70
What are some of the items that count towards roviding support for a dependent
Mortgage interest property taxes Utilitilies GI bill to pay tuition borrowed money to pay support tax exempt interest Child care expenses -even if the TP Is claiming the child care dependent credit BEWARE OF SPOUSE SPLITING THE EXPENSES
71
When a spouse revokes a non-resident alien spouse's status, what is NOT REQUIRED?
The reason for requesting the revokation
72
Is a dividend check received before death, but not cashed, income in respect of a decedant What is IRD?
NO. It goes on the final return. This is the 1040. IRD is reported on the 1041 Estate return. It is taxed when the recepient receives it at the recpients tax rate. No ste up basis
73
What are the rates for the Mortgage Credit Certificates
10% Minimum 50% Maximum
74
What income is used in calculating AGI? $12,000 Social Security $5,000 wages $4,000 dividends $3,000 Unemployment compensations $1,500 municipal bond interest
Only taxable income is included in AGI Wages, Dividends, unemployment = $12,000
75
What are the rulesj for determinings someone's tax home.
Degree of business activity The relative income earned at each location Total time spent at teh location THE AMOUNT OF EXPENSES IS NOT IMPORTANT
76
Are entertainment expenses for clients deductible?
NO
77
Beware of rental payments paid in advance.
They are not deductible in the current year. You deduct them in the next year.
78
If a business owner is hauling equipment and tools from his house to a regular place of business, is this deductible
NO. He can only deduct rental fees for a trailer to haul tools
79
If an employee does not participate in an accountable reimbursement plan, what happens to the business expenses that the employee pays?
If they are reimbursed, they are reported as w-2 wage income.
80
What is a major detail to keep in mind when calculating deductible expenses for an automobile?
The % of business use vs personal use This is only applied to direct expenses. insurance, gas maintenance etc. (PARKING AND TOLLS ARE NOT DIRECT EXPENSES) It does not apply to the calculation of mileage. It's just .67 x # of business miles
81
What is the rule on the cancellation of personal debt (Hint partial vs full)
partial cancellations of personal debt are non-deductible Full cancellations of personal debt are considered short term capital losses. REMEMBER - SHORT TERM CAPITAL LOSSES ARE LIMITED TO $3,000 WITH THE OPTION TO CARRY FORWARD ADDITIONAL LOSSES.
82
Triggers for deductible mileage expenses
Deductible - home to a temporary location NON-DEDUCTIBLE = HAULING EQUIPMENT COMMUTING MILES RESERVIST ARMED FORCES TRIP TO A LOCATION CLOSE TO HOME.
83
Which one is deductible 1. points paid by the seller on a mortgage 2. expenses to aquire a tax free investment like a municipal bond 3. interest paid on income taxes owed to the IRS
Only points paid by the seller on a mortgage
84
Are meal expenses that an employee pays while on a business trip, but the employer doesn't reimburse him, DEDUCTIBLE?
NO (Think - he's not participating in an accountable reimbursement plan)
85
What is the rule when boot received is less than realized gain on a like kind exchange
The amount realized is boot.
86
What items are included in boot on 1031 exchange? How is the seller paying selling expenses handled
mortgages assumed, cash, and FMV of other items Subtract the selling expneses from Boot. (The question asked about recognized gain - PAY ATTENTION TO RECOGNIZED VS REALIZED)
87
What are the rules for the allowed deductions for entertainment of clients? Meals are included, and the business owner is not present for the event.
If the owner is not present, meals can't be deducted. The expense is categorized as a gift and limited to $25/person per year.
88
WHY DO YOU DEDUCT 1/2 OF THE TRANSACTION COSTS FOR STOCKS SOLD?
I DON'T KNOW
89
What is the % of meals deduction for an interstate truck driver?
80%
90
What are the options to deduct a loss due to a bank or other financial institution going bankrupt or insolvent
Ordinary loss or short term capital loss NOT LONG TERM CAPITAL LOSS.
91

Enrolled Agent - Travis (12 decks)

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