PRINCIPLES OF TAXATION F/BUS...(LL)
23rd Edition
ISBN: 9781260433197
Author: Jones
Publisher: MCG
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Chapter 18, Problem 2TPC
To determine
Analyze the litigation strategy of CMP Corporation in selecting a trial court.
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Indicate whether the following statements are "True" or "False" regarding the administrative powers of the IRS.
a.
If the taxpayer meets the record-keeping requirement and substantiates income and deductions properly, the IRS bears the burden of proof in establishing a tax deficiency during litigation.
b.
The Code permits the IRS to assess a deficiency and to demand payment for the tax. However, no assessment or effort to collect the tax may be made until 30 days after a statutory notice of a deficiency (a 30-day letter) is issued.
c.
If the taxpayer neglects or refuses to pay the tax after receiving the demand for payment, a lien in favor of the IRS is placed on all property (realty and personalty, tangible and intangible) belonging to the taxpayer.
Which of the following is wrong?
Exempt corporations are subject to income tax on their income from unrelated activities.
Government-Owned and Controlled Corporations are subject to regular corporate income tax.
Exempt corporations who filed late are not subject to penalties because they have no tax due.
None of the above.
Sarah Keene, CPA, is the newly hired controller for Plexicon, Inc., which is a publicly traded
corporation. Ms. Keene's first job with Plexicon was the review of the company's accounting
practices on deferred income taxes. In doing her review, she noted differences between tax
and book depreciation methods that permitted Plexicon to realize a sizable deferred tax
liability on its balance sheet. As a result, Plexicon paid very little in income taxes at that
time.\\n\\n Keene also discovered that Plexicon has an explicit policy of selling off plant assets
before they reversed in the deferred tax liability account. This policy, coupled with the rapid
expansion of its plant asset base, allowed Plexicon to "defer" all income taxes payable for
several years, even though it always has reported positive earnings and an increasing EPS.
Keene checked with the legal department and found the policy to be legal, but she's
uncomfortable with the ethics of it.\\n\\nRequired:\\n\\nWhy would Plexicon…
Chapter 18 Solutions
PRINCIPLES OF TAXATION F/BUS...(LL)
Ch. 18 - Prob. 1QPDCh. 18 - Prob. 2QPDCh. 18 - Prob. 3QPDCh. 18 - Prob. 4QPDCh. 18 - Prob. 5QPDCh. 18 - Prob. 6QPDCh. 18 - Prob. 7QPDCh. 18 - Prob. 8QPDCh. 18 - Prob. 9QPDCh. 18 - Prob. 10QPD
Ch. 18 - Prob. 11QPDCh. 18 - Prob. 12QPDCh. 18 - Prob. 13QPDCh. 18 - Prob. 14QPDCh. 18 - Prob. 1APCh. 18 - Prob. 2APCh. 18 - Prob. 3APCh. 18 - Prob. 4APCh. 18 - Prob. 5APCh. 18 - Prob. 6APCh. 18 - Prob. 7APCh. 18 - Prob. 8APCh. 18 - Prob. 9APCh. 18 - Prob. 10APCh. 18 - Prob. 11APCh. 18 - Prob. 12APCh. 18 - A revenue agent determined that Ms. Owen underpaid...Ch. 18 - Prob. 14APCh. 18 - Prob. 15APCh. 18 - Prob. 16APCh. 18 - Prob. 17APCh. 18 - Prob. 18APCh. 18 - Prob. 19APCh. 18 - Prob. 20APCh. 18 - Prob. 22APCh. 18 - Prob. 8IRPCh. 18 - Prob. 9IRPCh. 18 - Prob. 1RPCh. 18 - Prob. 2RPCh. 18 - Prob. 1TPCCh. 18 - Prob. 2TPC
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