Juanita Sharp purchased a large parcel of property for $120,000. A short time after purchasing the property, Sharp submitted plans for the division of the parcel into six lots and the construction of three single-family residences on three of the lots. The city permits required that the property be divided into six lots and that street improvements and water and sewer access be provided. Sharp spent $22,000 for the street, water, and sewer improvements. As a result of the improvements, the value of each of the three vacant lots increased by $10,000, based on an appraisal completed subsequent to the completion of the improvements. The costs of constructing the three single-family residences totaled $200,000. a. List as many possible tax research issues as you can to determine how the original purchase price of $120,000, the $22,000 cost of the improvements, and the $200,000 cost of the construction of the homes should be allocated to the basis of each of the lots for purposes of determining gain or loss on the sale of the lots. b. After completing your list of tax research issues, list the keywords you might use to construct an online tax research query.
> When was each of the following 1986 code sections originally enacted? State how you obtained this information. a. § 843 b. § 131 c. § 469 d. § 263A
> Briefly describe the subject of each of the following letter rulings. State the type [private letter ruling (PLR), field service advice (FSA), service center advice (SCA), etc.] of each letter ruling. a. 200250019 b. 200130045 c. 201449010 d. 200849015
> Explain each of the elements of this citation: Rev. Proc. 2000-41, 2000-2 C.B. 317.
> Which office of the IRS issues private letter rulings? Who may request such a ruling? What kinds of issues are addressed therein?
> Enumerate the code sections that contain the chief tax law provisions on the following topics: a. S corporations b. Personal holding company tax c. Gift tax d. Tax accounting methods
> Of what relevance to the tax practitioner is a revenue procedure?
> Describe the structure of a typical revenue ruling.
> What is a revenue ruling?
> The burden of proof is on the taxpayer to prove that a provision of the regulations is improper. How could this affect one’s tax research?
> What are temporary regulations? What weight do they carry in the tax researcher’s analysis?
> In addition to committee reports, which are byproducts to the development of tax legislation, what other report may be of value to the tax researcher analyzing a new provision of the tax law? Why?
> What is the purpose of each of the following? a. Chief counsel notices (CCN) b. Service center advice (SCA) c. Chief counsel advice (CCA)
> Does the United States have an income tax treaty with any of the following countries? If it does, in what year was the treaty signed? State where you found this information. a. Australia b. Iceland c. Jamaica d. Sri Lanka
> Does the United States have an income tax treaty with any of the following countries? If it does, in what year was the treaty signed? State where you found this information. a. Japan b. United Kingdom c. Egypt d. Germany
> Comment on the statement, “All tax questions can be answered using the Internal Revenue Code.”
> One important problem that faces a tax researcher is interpretation of the Internal Revenue Code. Comment on each of the following interpretation problems: a. Exceptions to a code section b. Words that connect phrases, such as and and or c. Recent change
> Use an online tax service (e.g., Checkpoint, LexisNexis, CCH IntelliConnect) to answer the following questions: a. What is the general content of Internal Revenue Code § 25A? b. What is the general content of Internal Revenue Code § 67? c. What is the ge
> Use an online tax service (e.g., Checkpoint, LexisNexis, CCH IntelliConnect) to answer the following questions: a. What is the general content of Internal Revenue Code § 117? b. What is the general content of Internal Revenue Code § 165? c. What is the g
> Tax protesters who file “frivolous” tax returns or bring “frivolous” proceedings before the U.S. Tax Court are subject to certain fines or other penalties. What are the grounds for imposing each penalty? What is the maximum amount of each penalty?
> What are some of the potential pitfalls in the first step of the tax research process?
> The 16th Amendment to the Constitution had a significant effect on the U.S. income tax. What was it?
> Discuss the effect of Pollock v. Farmers’ Loan & Trust Co. on the development of U.S. income tax laws.
> What is the purpose of each of the following? a. Technical memorandum (TM) b. General counsel memorandum (GCM) c. Action on decision (AOD)
> The tax researcher must be careful not to overlook connecting words such as and, or, at least, and more than. Explain why this is important.
> Are there any exceptions to the general formatting rules for a code section? Give examples.
> Discuss the evolution of today’s Internal Revenue Code.
> What is a public law number? In P.L. 100-203, what do the “100” and the “203” indicate?
> When are committee reports useful to a tax researcher?
> Briefly summarize the usual steps of the legislative process for the development of federal tax legislation.
> When an Internal Revenue Code section and a tax treaty provision appear to conflict, which usually prevails?
> What is a tax treaty? Explain the purpose of a tax treaty. What matters generally are covered in a tax treaty?
> In order for them to have limited practice rights, the IRS requires non-credentialed tax return preparers to participate in the IRS Annual Filing Season Program. What does participation require, and why do you think the IRS has made this change?
> Discuss the powers of taxation that are granted to Congress by the U.S. Constitution. Are any limits placed on the powers of Congress to so tax?
> In what publication(s) would a tax researcher find the official listing of the IRS acquiescences and nonacquiescences to a Tax Court decision?
> In the current year, Dave receives stock worth $125,000 from his employer. The stock is restricted and cannot be sold by Dave for seven years. Dave estimates the stock will be worth $300,000 after the seven years. List as many tax research issues as you
> Many states have an ethics education requirement to become a CPA. Determine each of the following state’s ethics education requirements to become a CPA: a. California b. Texas c. North Carolina d. Your home state
> John and Marsha are married and filed a joint return for the past year. During that year, Marsha was employed as an assistant cashier at a local bank and, as such, was able to embezzle $75,000, none of which was reported on their joint return. Before the
> Joey parked his car on the top of a hill when he went to watch the X Games in San Diego. He did not properly set his brakes or curb the wheels when he parked the car. When he returned from the games, he found his car had rolled down the hill, smashed int
> Answer each of the following questions: a. What is found in Subpart C, § 10.51 of Circular 230? b. In Circular 230, where are the rules on knowledge of client omissions found? c. Describe the requirements of § 1.400.200 of the AICPA Code of Conduct. d. W
> Answer each of the following questions: a. What is found in Subpart A, § 10.7(a) of Circular 230? b. Describe the requirements of § 1.520.001 of the AICPA Code of Conduct. c. Which SSTS discusses whether a member may rely without verification on informat
> Jennifer owns 200 acres of land on which she grows flowers to sell to local nurseries. Her adjusted basis in the land is $30,000. She receives condemnation proceeds of $20,000 from the state for 10 acres of her land on which a new freeway will be built.
> Determine if your campus has any of the following online tax research services available for student use. If a service is available on your campus, describe how you would gain access to that system for research projects in your tax classes. a. LexisAdvan
> Which of the selected tax journals listed in Exhibit 2-5 can be found online? Which are available through your university’s library in either electronic or hard copy?
> In the tax research process, the researcher has an obligation to the client to evaluate authority. Do the precedents in all tax authority carry the same value? Explain.
> Discuss the difference between a revenue ruling and a revenue procedure.
> Phred Phortunate won his state lotto two years ago. His lotto ticket was worth $10 million, which was payable in 20 annual installments of $500,000 each. Phred paid $1 for the winning ticket. The lotto in Phred’s state does not allow winners to receive t
> Dr. Diego Dissolution is recently divorced and has some questions regarding payments he is making to his ex-wife (Mrs. D.). Diego is 45 years old and has a successful dental practice. Mrs. D. was divorced from her first husband six years ago. Diego is pa
> Tom and Donna were divorced three years ago. At the time of their divorce, they owned a residence whose value had significantly increased during the marriage. Tom remained half-owner of the house, but he moved out and allowed Donna to continue living in
> Which of the following situations would most likely result in a violation of the practitioner’s ethical standards? Explain your answer. a. A CPA (not in public practice) is controller of a bank and grants permission to the bank to use his “CPA” title in
> Matthew Broadway was a partner in the law firm of Johnson & Smith, a partnership of 20 partners, for the past 10 years. Without the knowledge or consent of the other partners, Matthew worked on a highly complicated acquisition and merger project for six
> Sam Manuel has been employed on a full-time basis as an electrical engineer for the past three years. Prior to obtaining full-time employment, he was self-employed as an inventor of complex electronic components. During this period of self-employment, mo
> Which of the following is a contingent fee under Circular 230 § 10.27? A fee (1) that is based on a percentage of the refund reported on a return, (2) that is based on a percentage of the taxes saved, or (3) that otherwise depends on the specific result
> On December 1, 2014, Ericka receives $18,000 for three months’ rent (December 2014, January 2015, and February 2015) for an office building. List as many tax research issues as you can to determine the tax consequences of this transaction. Do not attempt
> The Mucho Oro Indian Tribe operates a casino on its reservation in Arizona. The casino is very profitable, and therefore the tribe has excess money to invest. The tribe is approached by an entrepreneur who wants to build an outlet mall next to the casino
> Distinguish between a citation with “I.R.B.” in it and one with “C.B.” in it.
> Tax law provisions tend to change over time. Explain how this might affect tax research and planning.
> What is the precedent-setting value of each of the following cases? a. Lowell Bar Association v. Loeb b. Bercu c. Sperry v. Florida
> Summarize what is discussed in each of the following SSTS: a. SSTS No. 1 b. SSTS No. 4 c. SSTS No. 6
> Ned Naive operated several franchised stores, and at the home office’s suggestion, he consolidated its payroll and accounting functions with Andy the Accountant. Andy is not a CPA. Last year, Andy began misappropriating taxpayers’ escrowed tax withholdin
> Vincent (“Vinny”) Vineyard is a very successful physician in Temecula, California. He earns approximately $800,000 per year from his medical practice. His two children have graduated from college, and he and his wife are now “empty-nesters.” His son, Vin
> The Uniform CPA exam has four parts. Briefly summarize the tax and ethics issues covered in the REG section of the exam.
> Which subpart and section of Circular 230 discusses each the following topics? a. Solicitation b. Negotiation of a taxpayer’s refund checks c. Who may practice before the IRS d. Authority to disbar or suspend from practice before the IRS
> Summarize what is discussed in each of the following sections of Circular 230: a. Subpart B, § 10.33 b. Subpart B, § 10.35 c. Subpart B, § 10.36 d. Subpart B, § 10.37
> Summarize what is discussed in each of the following sections of Circular 230: a. Subpart A, § 10.22(b) b. Subpart A, § 10.7(c)(1)(vi) c. Subpart B, § 10.24 d. Subpart B, § 10.34
> Summarize what is discussed in each of the following sections of Circular 230: a. Subpart C, § 10.51(a)(12) b. Subpart A, § 10.6(e) c. Subpart A, § 10.3(f) d. Subpart B, § 10.27
> What is the precedential value of an IRS written determination under IRC § 6110?
> Summarize what is discussed in each of the following sections of Circular 230: a. Subpart A, § 10.4(c) b. Subpart B, § 10.21 c. Subpart B, § 10.26 d. Subpart B, § 10.29
> What is collateral estoppel? How does it affect tax research and planning?
> What are the search connectors discussed in the text used by Checkpoint? Describe how each operates.
> How does the term “the unauthorized practice of law” apply to CPAs?
> Donna Deduction is a staff accountant for Dewey, Cheatham, and Howe, LLP. She and other staff raid the office supply cabinet for office supplies to take home to use. In addition to the standard paper, pens, paper clips, and so forth, the staff takes home
> What are the disadvantages of using an online tax service?
> Ethical professional behavior is the interaction of several standards. Identify these standards and briefly describe each.
> The text discusses three types of ethical reasoning. Identify them and give a short description of each.
> Briefly describe what is contained in each of the following tax services: a. Thomson Reuters CheckPoint b. CCH IntelliConnect c. LexisAdvance Tax d. Westlaw
> Who sets ethical rules for attorneys in the various states?
> Where would a tax researcher find pertinent committee reports?
> What is the purpose of citing relevant authority in research memos?
> Describe an online tax research system. What are the primary advantages of such a system?
> Identify and briefly describe the two major types of tax research issues.
> When a member learns of an error in a previously filed tax return or learns of an error during an audit, how is he or she to respond and still be in compliance with SSTS No. 6?
> Last year a taxpayer was audited by the IRS and an item of deduction on the tax return was disallowed. On this year’s tax return, the taxpayer would like to deduct a similar item. Discuss the circumstances under which a member may allow the taxpayer to t
> A member may use estimates in completing a tax return according to SSTS No. 4. When might the use of estimates be considered appropriate?
> What is deemed to be substantial authority under the IRC § 6662 regulations? Why is this important?
> According to SSTS No. 2, a tax return should be signed by a member only after reasonable effort has been made to answer all questions on the return that apply to the taxpayer. What are some of the reasonable grounds under which a member may sign a return
> What threshold does SSTS No. 1 provide for a tax practitioner regarding tax return positions? Could disclosure of the position influence that threshold?
> When must a member tax practitioner follow SSTS when preparing or signing a return?
> Discuss the precedential value of private letter rulings, determination letters, and technical advice memoranda. What role do these items play in conducting tax research?
> What are the SSTS? Who issues them? Discuss their principal objectives.
> Under the Confidential Client Information Rule of the AICPA Code of Professional Conduct, a CPA in public practice must not disclose confidential client data without the specific consent of the client. Under what conditions might a disclosure of confiden
> In each of the following (independent) situations, state which AICPA Code of Professional Conduct rule or principle (if any) is violated by a CPA? a. A CPA in public practice opens a tax practice and names the new firm “Jill’s Super Tax.” b. In return fo
> The tax researcher must find the facts as the first step in tax research. Give examples of the kind of information that a tax practitioner might want to obtain.
> A CPA in public practice must meet certain general standards under § 1.300.001 (the General Standards Rule). Discuss the four general standards of this rule.
> What specific tax-related situations may result in a conflict of interest for members in public practice under the Integrity and Objectivity Rule of the AICPA Code of Professional Conduct?
> Briefly list and discuss the primary threats to complying with the Independence Rule of the AICPA Code of Professional Conduct.
> Practicing CPAs generally are subject to the AICPA Code of Professional Conduct. What is its stated purpose?
> Not all individuals who for compensation prepare or assist with the preparation of all or substantially all of a tax return or claim for refund are subject to the duties and restrictions relating to practice in subpart B as well as subject to the sanctio
> A compensated individual who prepares or assists with the preparation of all or substantially all of a tax return or claim for refund must have a PTIN. What is a PTIN, and which individual(s) are required to obtain one?
> What is a technical advice memorandum? Who may request it? What kinds of issues are addressed therein? Does the IRS include technical advice memoranda in any official publication?
> A practitioner cannot give written advice under Circular 230 § 10.37 in which situations?
