Representation quiz8

Which of the following statements is false? Select one: O A. In general, individual taxpayers are required to file a tax return only if their gross income exceeds the standard deduction OB. The penalty for failure to file is more severe than the penalty for failure to pay OC. Taxpayers may file a tax return even when they are not required to do so to obtain a refund of income taxes withheld OD. Individual tax returns are always due on April 15 for calendar-year individuals

Indicate whether the following statements are "True" or "False" regarding the statute of limitations. a. If no return is filed or a fraudulent return is filed, assessments can be made at any time. b. If a taxpayer omits an amount of gross income in excess of 25 percent of the gross income stated on the return, the statute of limitations does not apply. c. In general, any tax that is imposed must be assessed within three years of the later of (a) the filing date of the return or (b) the unextended due date of the return. d. The statute of limitations may be extended for a fixed period of time by mutual consent of the IRS and the taxpayer.

A taxpayer received Form 1099-A with box 5 checked, indicating recourse debt. This informs the tax preparer that:   a)  There may be taxable income associated with this event.  b) There cannot be taxable income associated with this event.  c) This document is not reporting cancellation of debt income, so this is not relevant unless a Form 1099-C is also received.  d) There can be capital gain from this event, but not ordinary income.

1. Bad debt is an expense in the books of accounts when a provision is made for it. Such amount should likewise be deducted from gross income to arrive at taxable income. 2. The phrase "actually charged off from taxpayer's book of accounts" means that the amount of money lent by the taxpayer (in the course of his business, trade or profession) to his debtor that had been recorded in the books of account as receivable has actually become worthless as of the end of the taxable year, and that the said receivable has been cancelled and written off from the said taxpayer's books of accounts. A= 1st statement is true, second statement is false. B= 1st statement is false, second statement is true. C= Both statements are false. D= Both statement are true. с B OA D

If the applicable statute of limitations on assessment of a tax deficiency has expired and a taxpayer signs a Form 872 extending the statute of limitations, the statute of limitations on assessment is extended. a). True b). False.

26. Specific provisions for bad debts are deductible for tax purposes once the taxpayer is able to demonstrate that reasonable steps were taken to collect the debts. Select one: True False

-Which of the following will not require reporting of taxpayer’s income on a calendar basis? *   If the taxpayer is a corporation operating in a fiscal year; If the taxpayer does not keep books of accounts; If the taxpayer has no annual accounting period; All of the above

Which of the following statements accurately describes the impact of accounting for bad debts on taxes? A) Accounting for bad debts increases taxable income in the period they are recognized. B) Accounting for bad debts decreases taxable income in the period they are recognized. C Accounting for bad debts has no impact on taxable income. D) Accounting for bad debts defers taxable income to future periods.

Deferred income taxes result from: a. The fact that bond interest is deductible in the computa-tion of taxable income. b. Depositing income taxes due in future years in a specialfund managed by an independent trustee.c. Differences between certain revenue and expense itemsrecognized in financial statements but not in income taxreturns.d. The inability of a bankrupt company to pay its incometax liability on schedule.

When a petition is filed with the Tax Court, the taxpayer is required to pay the deficiency only if he loses, not before. (True/False)

Which of the following statements about extensions of time to file certain business income tax returns is true? a)It is required of mostentities to us e electronic funds transfer to make all federal tax deposits. b) The IRS will send taxpayers a notification if their request for an extension is approved. c) Property filing the form wil not automatically give taxpayers the maximum  extension of time to file allowed. d) The maximum extension of the to file allowed from the due date of the taxpayer's business return is generally three months.

Which of the following statements NOT correct? a. If a taxpayer is not in agreement with the decision of the Tax Appeals Authority, there is no further action that the taxpayer can take.  b. Where a taxpayer loss an appeal, the taxpayer is required to pay interest on the unpaid tax from the payment date statement on the Decision Notice. c. Tax planning within the confines of the tax laws is not illegal.  d. Effective tax management may result in significant cost savings.

Taxpayers can deduct a nonbusiness bad debt beginning in the year it is deemed partially worthless. True or false

Which of the following is not true? O A taxpayer must obtain approval or consent of the IRS to change their taxable year once adopted. O In certain cases, a taxpayer may change their method of accounting because automatic consent has been provided in an applicable revenue procedure. O A taxpayer's method of accounting must clearly reflect income. A taxpayer must obtain approval or consent of the IRS to adopt a method of accounting for a new trade or business.

Recognition of tax benefits in a loss year due to a loss carryforward requires A) the establishment of a deferred tax liability. B) only a note to the financial statements. OC) the establishment of an income tax receivable. OD) the establishment of a deferred tax asset.

f a business owner paid for the business expenses with their personal account, and those expenses would otherwise be deductible, they: A. CANNOT be deducted on the tax return because they weren't paid for from a business account. B. CAN be included on the tax return as long as proof of the expenses is sent with the return. C. CAN be deducted on the tax return. D. CANNOT be deducted because the IRS requires separate business and personal bank accounts.

43. True or False. If the debt is canceled due to services rendered by the debtor, the basis of tax is the value of the service rendered.