Substantiation and Disclosure Flashcards
A tax preparer has advised a company to take a position on its tax return. The tax prepare believes that there is a 75% possibility that the position will be sustained if audited by the IRS. If the position is not sustained, an accuracy-related penalty and a late payment penalty would apply. What is the tax preparer’s responsibility regarding disclosure of the penalty to the company?
The tax preparer is responsible for disclosing both penalties to the company.
Which of the following burdens of proof must be met when a disclosed position regarding a particular individual deduction is evaluated to determine whether it was taken in good faith.
greater than or equal to a 20% chance of being sustained.
What form must be filled to disclose a tax position?
Form 8275 Disclosure Statement is used to disclose positions that lack substantial authority. Form 8275-R is used to disclose a tax position that is contrary to Treasury Regulations.
What is Schedule UTP?
Schedule UTP is for Uncertain Tax Position Statement and is for corporation that have at least 10 million in assets.
A tax return preparer is subject to a penalty for knowingly or recklessly disclosing corporate tax return information, if the disclosure is made
If the disclosure is made to enable a third party to solicit business from the tax payer.
A CPA prepared a tax return that involved a tax shelter transaction that was disclosed on the return. In which of the following situation would a tax return preparer penalty not be applicable?
It is reasonable to believe that the position would more likely that not be upheld.
In which of the following circumstances will a tax return preparer not be assessed an understatement penalty for a reportable transaction on a tax return?
The position has a more likely that no chance of being sustained. This is the highest threshold applied to tax positions.
