Tax Ch 2

List the steps in the legislative process to enact a tax law.

1.

If the taxpayer misreports income (not exceeding 25 percent of gross income) or deductions

3 years

If the taxpayer omits items of gross income that exceed 25 percent of gross income

6 years

Which of the choices below BEST describes the judicial doctrine of stare decisis?

A court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction.

Which of the following statements regarding tax return extensions are CORRECT?

A six-month extension allows a taxpayer to file a return up to six months after the original due date. "S" Corporations may request an automatic six month extension to file.

Which of the following statements is correct regarding extensions?

An extension to file is granted automatically at the request of the taxpayer.

What is the due date for calendar-year corporate income tax returns assuming the date does NOT fall on a Saturday, Sunday or holiday?

April 15. Corporate tax returns are due on the fifteenth day of the fourth month following year-end, which is typically April 15.

___________ must file annually, regardless of the level of income.

Corporations

Which of the following statements are correct regarding tax filing requirements? (Check all that apply.)

Estates are required to file income tax returns if their gross income exceeds $600. All corporations must file regardless of income.

________ and ___________ must file if their gross income exceeds $600.

Estates, trusts

What is the main statutory tax authority?

Internal Revenue Code

The __________ ___________ Committee attempts to reconcile the House and Senate versions of a tax bill.

Joint Conference

What is the due date for calendar-year partnership income tax returns, assuming the date does NOT fall on a Saturday, Sunday or holiday?

March 15

If the taxpayer commits fraud or doesn't file a tax return

No statute of limitations

Which trial court provides for a jury trial?

The U.S. District Court

Which trial court has a small claims division for tax liabilities of $50,000 or less?

The U.S. Tax Court

How does the losing party in a trial court decide which U.S. Circuit Court of Appeals will hear the case?

The case must be appealed to the U.S. Circuit Court with jurisdiction over the taxpayer's case (typically based on the taxpayer's residence).

Who has the ultimate authority to interpret the IRC and settle tax disputes?

The judicial system

What action does the 30-day letter provide a taxpayer if the taxpayer does NOT agree with an assessment after being audited by the IRS?

The taxpayer can request an appeals conference.

What action does the 90-day letter provide a taxpayer if the taxpayer does NOT agree with an assessment after being audited by the IRS and participating in the appeals conference?

The taxpayer should petition the U.S. Tax Court to hear the case.

To where does a losing party in a trial level court appeal the decision?

U.S. Circuit Court of Appeal

The _________ ___________ system assigns a score to each tax return representing the probability the tax liabilities on the return have been under reported.

discriminant function

Revenue _________ address the application of the Code and regulations to a specific factual situation. They provide a much more detailed interpretation of the Code than the regulations as it applies to a specific transaction.

rulings

Primary sources consist of statutory, administrative, and judicial sources of the law. The __________ source includes committee reports from the House Ways and Means Committee or the Senate Finance Committee.

statutory

True or false: A Joint Conference Committee report is important, but is NOT considered an authority of the tax law when disputing a tax position.

False: These committee reports are considered statutory sources of the tax law and can be used to interpret the tax laws.

Which of the following criteria determine whether an individual must file a tax return? (Check all that apply.)

Gross income, filing status, age

What judicial doctrine means that a court will rule consistently with its previous rulings and the rulings of higher courts with appellate jurisdiction?

Stare decisis