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Chapter 16
1. A tax treaty with a foreign country negotiated by the president is considered a legislative source of tax law.
a.
True
b.
False
2. Title 26 of the United States Code is commonly referred to as the Internal Revenue Code.
a.
True
b.
False
3. After a tax bill has been enacted, the House Ways and Means committee prepares a general explanation of the bill as
approved by the president.
a.
True
b.
False
4. An interpretative regulation is issued when Congress specifically delegates the authority to the Treasury Department to
write specific rules for a designated Code section.
a.
True
b.
False
5. If the IRS loses a case in a court proceeding, they may issue an acquiescence that means they will not follow the
decision in similar cases.
a.
True
b.
False
6. The National Office of the IRS issues private letter rulings and technical advice memoranda and these pronouncements
are binding on the IRS.
a.
True
b.
False
7. The Tax Court will not necessarily follow a U.S. Court of Appeal decision unless the taxpayer lives in the geographic
jurisdiction of the appellate court.
a.
True
b.
False
8. When the Supreme Court grants a writ of certiorari, they are agreeing to review a lower court's decision.
a.
True
b.
False
9. All judicial citations follow the same format: case name, volume number of the reporter in which the case is published,
name of the reporter, and the page of the reporter on which the case begins.
Chapter 16
a.
True
b.
False
10. Citators provide the full text of court decisions.
a.
True
b.
False
11. Tax articles in law review journals are primary sources of federal income tax law.
a.
True
b.
False
12. Search engines used in computer-assisted tax research tools provide advantages over manual searches.
a.
True
b.
False
13. Tax planning refers to the preparation of tax returns and doing research on completed transactions.
a.
True
b.
False
14. The first step in tax research is to locate the relevant legal authorities.
a.
True
b.
False
15. The final step in the tax research process is to reach a conclusion, make a recommendation and communicate the
results to the client.
a.
True
b.
False
16. Which of the following is (are) primary sources of tax law?
I.
Joint Conference Committee Reports.
II.
Journal of Taxation.
III.
Revenue Procedures.
IV.
Tax Treaty with France.
V.
U.S. Tax Court Memorandum Decisions.
a.
Only statement IV is correct.
b.
Only statement I is correct.
c.
Statements II and III are correct.
d.
Statements I, III, IV, and V are correct.
e.
Statements I, II, III, IV, and V are correct.
Chapter 16
17. Which of the following is (are) secondary sources of tax law?
I.
Joint Conference Committee Reports.
II.
Journal of Taxation
III.
Revenue Procedures.
IV.
Tax Treaty with France.
V.
U.S. Tax Court Memorandum Decisions.
a.
Only statement IV is correct.
b.
Only statement II is correct.
c.
Statements II and III are correct.
d.
Statements I, II, III, and V are correct.
e.
Statements I, II, III, IV, and V are correct.
18. Which of the following statements pertaining to tax law is true?
I.
A tax textbook is considered a primary source.
II.
Secondary sources help locate and interpret primary sources.
III.
Primary sources emanate from the three branches of the federal government.
IV.
An article in a law journal written by a former commissioner of the Internal Revenue
Service is considered a secondary source of tax law.
a.
Only statement I is correct.
b.
Statements I and II are correct.
c.
Statements I, II, and III are correct.
d.
Statements II, III, and IV are correct.
e.
Statements I, II, III, and IV are correct.
19. Primary sources of tax law include
I.
Treasury Regulations.
II.
IRS Revenue Procedures.
III.
Internal Revenue Code of 1986.
IV.
The Tax Law Review.
a.
Only statement III is correct.
b.
Statements II and III are correct.
c.
Only statement I is correct.
d.
Statements I, II, and III are correct.
e.
Statements I, II, III, and IV are correct.
20. Secondary sources of tax law include
I.
Internal Revenue Code of 1986.
II.
United States Tax Reporter (RIA)
III.
Taxes: The Tax Magazine.
IV.
Tax Court Memo Decision.
Chapter 16
a.
Only statement III is correct.
b.
Statements II and III are correct.
c.
Only statement I is correct.
d.
Statements I, II, and III are correct.
e.
Statements I, II, III, and IV are correct.
21. Title 26 of the U.S. Code includes
I.
Bankruptcy legislation.
II.
Employment tax legislation.
III.
Estate and Gift tax legislation.
IV.
Alcohol and Tobacco tax legislation.
a.
Only statement II is correct.
b.
Statements II and III are correct.
c.
Statements II, III, and IV are correct.
d.
Statements I, II, III, and IV are correct.
e.
None of the above are in Title 26.
22. Which of the following sources of tax law authority has the highest tax validity?
a.
Cumulative Bulletin.
b.
Tax Court Decision.
c.
Revenue Ruling.
d.
Internal Revenue Code Section.
e.
Regulation Section.
23. Title 26 of the U.S. Code includes
a.
Alcohol and tobacco tax legislation only.
b.
Gift tax and estate tax legislation only.
c.
Income Tax legislation only.
d.
Self employment tax legislation only.
e.
All of the tax legislation mentioned above.
24. Which of the following Administrative sources has the highest level of authority?
a.
Revenue Ruling
b.
Nonacquiescence
c.
Treasury Regulation
d.
General Counsel Memorandum
e.
Private Letter Ruling
25. The most important source of current federal income tax law is the
a.
Internal Revenue Code of 1986, as amended.
Chapter 16
b.
IRS.
c.
U.S. Supreme Court.
d.
U.S. Tax Court.
26. Which of the following statements concerning the Internal Revenue Code is true?
I.
The most current tax laws may be found in the Internal Revenue Code of 2011.
II.
A tax treaty may override the Code.
III.
The most common references to a particular part of the Code are to a section.
IV.
The Internal Revenue Code is considered a secondary source of tax law.
a.
Statements I and II are correct.
b.
Statements I and III are correct.
c.
Statements II and III are correct.
d.
Statements II and IV are correct.
e.
Only II is correct.
27. After major legislation is enacted, a general explanation of the law or “blue book” may be issued by which of the
following:
a.
House Ways and Means Committee.
b.
Joint Committee on Taxation.
c.
Treasury Department
d.
Senate Finance Committee.
28. What body has jurisdiction over all tax matters and is responsible for initiating tax legislation?
a.
Joint Conference Committee.
b.
Joint Committee on Taxation.
c.
House Ways and Means Committee.
d.
Judiciary Committee.
e.
Senate Finance Committee.
29. What body oversees the operation and administration of the tax system as a whole, and prepares a general explanation
of any tax bill signed by the president?
a.
Joint Conference Committee.
b.
Joint Committee on Taxation.
c.
House Ways and Means Committee.
d.
Judiciary Committee.
e.
Senate Finance Committee.
30. During the legislative process, several groups of lawmakers become part of the system. Those groups include the
I.
House Ways and Means Committee
II.
Joint Conference Committee
III.
U.S. Supreme Court
Chapter 16
IV.
Joint Committee on Taxation
V.
U.S. Senate
a.
Statements II and III are correct.
b.
Statements I, IV, and V are correct.
c.
Statements I, II, and V are correct.
d.
Only statement I is correct.
e.
Only statement V is correct.
31. What body prepares a compromise version of tax legislation when the House and Senate versions are not in
agreement?
a.
Arbitration Committee.
b.
Joint Committee on Taxation.
c.
House Ways and Means Committee.
d.
Judiciary Committee.
e.
Joint Conference Committee.
32. Which of the following authorities can help the taxpayer interpret a new tax law soon (i.e. during the first few months)
after it becomes law?
a.
Treasury Regulations.
b.
Committee Reports.
c.
Revenue Rulings.
d.
Internal Revenue Code.
e.
Court Cases.
33. If the House and the Senate both approve similar but not identical tax bills, any differences between the two pieces of
legislation are resolved by the
a.
Joint Conference Committee
b.
Ways and Means Committee
c.
Finance Committee
d.
House Appropriations Committee.
34. Which of the following is generally accorded the highest level of authority?
a.
Private Letter Ruling.
b.
A legislative regulation.
c.
Revenue Ruling.
d.
Decisions of a U.S. District Court.
e.
Internal Revenue Bulletin.
35. Which of the following is true of revenue rulings?
a.
Lower courts are bound by them.
Chapter 16
b.
They are a subset of Treasury Regulations.
c.
Once affirmed by an appellate court, they have the force of law.
d.
Although they represent the official policy of the IRS, courts may overrule them.
e.
All of the above.
36. The Internal Revenue Service is a branch of
a.
Congress
b.
The Secret Service
c.
The Federal Reserve Bank
d.
The Treasury Department
e.
The Federal Bureau of Investigation
37. Tax regulations are first issued in
a.
Proposed form
b.
Revised form
c.
Temporary form
d.
Final form
e.
Either A or C
38. The acquiescence policy of the IRS extends to
a.
the U.S. Tax Court
b.
the U.S. District Court
c.
the U.S. Circuit Court of Appeals
d.
All of the above
39. Which of the following statements pertaining to acquiescence and nonacquiescence is not true?
a.
Acquiescence means the IRS will follow the decision of the court in cases.
b.
An announcement of nonacquiescence would prevent a taxpayer with similar circumstances from following
that court decision.
c.
The IRS may issue an acquiescence or nonacquiescence to opinions of the Tax Court and other federal court
decisions.
d.
An announcement of acquiescence may be withdrawn, modified or reversed.
40. The IRS may acquiesce or nonacquiesce to decisions from which of the following courts:
a.
U.S. Tax Court.
b.
U.S. District Court.
c.
U.S. Court of Appeals.
d.
U.S. Court of Federal Claims.
e.
All of the above.
41. Which of the following types of cases are subject to the Chief Counsel's Acquiescence / Non -acquiescence Policy?
a.
Circuit Court Decisions.
b.
District Court Decisions.
c.
U.S. Court of Federal Claims.
d.
Tax Court Regular Decisions.
e.
All of the above are correct.
42. A nonacquiescence
a.
is issued when the IRS wins a court case.
b.
is issued by the Joint Committee on Taxation.
c.
means that the IRS disagrees with a decision of the court.
d.
means that the IRS will follow the decision in similar situations.
43. Which of the following is/ are trial level courts for tax cases?
I.
U.S. Court of Federal Claims.
II.
U.S. Supreme Court.
III.
U.S. Court of Appeals for the Federal Circuit.
IV.
U.S. Court of Appeals for the Tenth Circuit.
V.
U.S. District Court.
a.
Only statement V is correct.
b.
Only statement II is correct.
c.
Statements I and V are correct.
d.
Statements II, III, and IV are correct.
e.
Statements I, II, III, IV, and V are correct.
44. Which of the following courts is a trial court for tax cases?
a.
U.S. Supreme Court.
b.
U.S. District Court.
c.
U.S. Court of Appeals.
d.
U.S. Court of Appeals for the Federal Circuit.
45. Which of the following is a characteristic of U.S. District Courts?
a.
A District Court is a national court that hears cases from taxpayers anywhere in the U.S.
b.
The District Court judges are tax specialists who hear only tax cases.
c.
A taxpayer need not pay any alleged deficiency in order to bring an action against the IRS.
d.
The taxpayer may obtain a jury trial; the jury decides matters of fact but not matters of law.
46. Taxpayers may elect to use the small claims division of the U.S. Tax Court if the amount of tax in dispute is less than
a.
$1,000
Chapter 16
b.
$2,500
c.
$5,000
d.
$10,000
e.
$50,000
47. A disadvantage of electing to use the small claims division of the Tax Court is that
a.
it is a more formal proceeding.
b.
the decision is final and can not be appealed.
c.
it tends to be more expensive.
d.
it can cause many delays.
e.
All of the above.
48. Taxpayers need to pay the tax deficiency in advance and sue for a refund in
I.
U.S. Tax Court.
II.
U.S. District Court.
III.
U.S. Court of Federal Claims.
a.
Only statement I is correct.
b.
Only statement II is correct.
c.
Only statement III is correct.
d.
Statements II and III are correct.
e.
Statements I, II, and III are correct.
49. Tara does not agree with a proposed deficiency of additional tax resulting from an examination of her individual
income tax return. She has not been able to satisfactorily resolve her case within the administrative processes of the
Internal Revenue Service. Which of the following courts may she petition without first making payment of the contested
deficiency?
a.
United States Tax Court.
b.
United States District Court.
c.
U.S. Court of Federal Claims.
d.
Any of the above.
50. The court that a taxpayer may not select for trial is
a.
the Tax Court.
b.
the U.S. Claims Court.
c.
the U.S. District Court.
d.
the U.S. Court of Appeals.
51. The initial appeal from the U.S. Court of Federal Claims is to the
a.
U.S. District Court..
b.
U.S. Tax Court.
Chapter 16
c.
U.S. Supreme Court.
d.
U.S. Court of Appeals for the Federal Circuit.
52. Which of the following is/ are appellate level courts for tax cases?
I.
U.S. Court of Federal Claims.
II.
U.S. Supreme Court.
III.
U.S. Court of Appeals for the Federal Circuit.
IV.
U.S. Court of Appeals for the Tenth Circuit.
V.
U.S. District Court.
a.
Only statement V is correct.
b.
Only statement II is correct.
c.
Statements I and V are correct.
d.
Statements II, III, and IV are correct.
e.
Statements I, II, III, IV, and V are correct.
53. A taxpayer who loses in the U.S. Tax Court may appeal directly to the:
a.
Supreme Court.
b.
U.S. Court of Federal Claims.
c.
U.S. District Court.
d.
U.S. Circuit Court of Appeals.
e.
Any of the above.
54. Which of the following is not true of the Supreme Court's appellate jurisdiction?
a.
All appealed cases can reach the Supreme Court through the Writ of Certiorari and be heard at that level.
b.
Review by the Supreme Court is almost entirely discretionary.
c.
For most taxpayers, the final review is at the Court of Appeals level because the Supreme Court does not hear
many tax cases.
d.
The Supreme Court's decision not to grant a Writ of Certiorari means that the decision of the lower court still
stands.
55. If the U.S. Supreme Court denies a writ of certiorari, it means
I.
The court did not feel the case was important enough to review.
II.
The decision of the lower court is correct.
III.
The decision of the circuit court of appeals is effectively reversed.
IV.
The Supreme Court has agreed to hear the case.
a.
Only statement I is correct.
b.
Statements I and II are correct.
c.
Statements II and IV are correct.
d.
Only statement III is correct.
e.
Statements I, III, and IV are correct.
56. The Tax Court strictly follows the precedent of prior decisions of the Court of Appeals for a particular circuit when
a.
the taxpayer requests it to do so.
b.
the IRS requests it to do so.
c.
the taxpayer resides in the United States.
d.
the taxpayer resides in that circuit.
57. Which regulation citation concerns Code Section 469?
a.
Reg. Sec. 469
b.
Reg. Sec. 469-3
c.
Reg. Sec. 1.3-469
d.
Reg. Sec. 1.469-3
e.
Reg. Sec. 469.72-3
58. Which regulation deals with Code Section 170?
a.
Reg. Sec. 1.170-5
b.
Reg. Sec. 170.162-5
c.
Reg. Sec. 1.5-170
d.
Reg. Sec. 170
e.
Reg. Sec. 170.25-5
59. Which of the following regulations deals with Estate Tax?
a.
Reg. Sec. 1.165-1
b.
Reg. Sec. 20.2014-5
c.
Reg. Sec. 25.2518-5
d.
Reg. Sec. 301.7002-5
60. Which of the following regulations deals with Income Tax?
a.
Reg. Sec. 1.165-1
b.
Reg. Sec. 20.2014-5
c.
Reg. Sec. 25.2518-5
d.
Reg. Sec. 301.7002-5
61. Which of the following is a permanent citation?
I.
Rev. Proc. 84-33, 1984-1 C.B. 134.
II.
Rev. Rul. 92-83, I.R.B. No. 14, 6.
III.
O'Neil v. Comm., 44 TCM 843 (1989).
IV.
Prop. Reg. Sec. 1.283-4(c).
a.
Only statement I is correct.
b.
Statements I, II, and IV are correct.
c.
Statements I and III are correct.
Chapter 16
d.
Statements II and III are correct.
e.
Statements I, II, III, and IV are correct.
62. How should the following citation be interpreted? Hewlett Packard Co. v. Comm., 67 T.C. 736 (1975).
a.
A 1967 decision of the Tax Court, found on page 736.
b.
A decision of the Court of Claims, found in Volume 67, on page 736.
c.
A 1975 decision of the Tax Court, found in Volume 736.
d.
A decision of the Tax Court, found on page 736, in Volume 67.
63. All of the following citations are to trial court decisions except:
a.
George E. Jones, 21 B.T.A. 431 (1940)
b.
Harper Smith, 577 F.2d 212 (CA-3, 1978)
c.
George F. Dowell v. U.S. 370 F.Supp. 69 (D. Ct. Tx. 1974)
d.
Raymond R. Windle, 65 T.C. 694 (1976)
e.
Jerome Prizant, 30 TCM 817 (1971)
64. Which of the following citations denotes a regular decision of the Tax Court?
a.
35 T.C. 1083
b.
93-1 USTC 9865
c.
39 AFTR 2d 77-640
d.
All of the above could refer to a regular decision of the Tax Court
65. Which of the following are numbered to match the Code section to which they are related?
a.
Private Letter Rulings.
b.
Revenue Rulings.
c.
Treasury Regulations.
d.
All of the above.
66. Which of the following citations denotes a regular decision of the U.S. Tax Court?
a.
247 F.Supp. 1519
b.
49 TCM 769
c.
54 TC 1873
d.
531 F.2d 1165
e.
1987-2 CB 674
67. Which of the following Letter Rulings might have been issued on January 3, 1991?
a.
PLR 9103001
b.
PLR 9110303
c.
PLR 9101027
Chapter 16
d.
All of the above
68. When posed with a particularly complex tax question, a researcher with little previous experience with the issue would
be best served at the outset by consulting:
a.
the applicable legislative history.
b.
the Treasury Regulations.
c.
the Internal Revenue Code.
d.
a "tax service" (e.g. CCH, RIA).
69. Which of the following is (are) secondary sources of tax law?
I.
Tax Notes.
II.
LEXIS.
III.
RIA Federal Tax Citator.
IV.
Tax Court Memorandum.
a.
Statements I, II, and III are correct.
b.
Statements I and II are correct.
c.
Statements II and IV are correct.
d.
Only statement IV is correct.
e.
Only statement III is correct.
70. Which of the following is (are) secondary sources of tax law?
I.
Revenue Ruling.
II.
The Tax Adviser.
III.
Murphy and Higgins' Concepts in Federal Taxation.
IV.
Tax Treaty with Denmark.
a.
Statements I, II, and III are correct.
b.
Statements I and II are correct.
c.
Statements II and III are correct.
d.
Only statement IV is correct.
e.
Only statement III is correct.
71. Citators
a.
are primary authorities.
b.
are not necessary for effective tax research.
c.
refer to the case being evaluated as the citing case.
d.
give information on the history of a court case.
72. Which of the following statements is correct?
I.
The history of a cited case refers to all other decisions by higher or lower courts in the
same case.
II.
The citator gives information about how the decision of a cited case has been interpreted
Chapter 16
by other courts.
a.
Only statement I is correct.
b.
Only statement II is correct.
c.
Both statements are correct.
d.
Neither statement is correct.
73. All of the following are advantages of computer-assisted tax research (CATR), except
a.
CATR sources use search engines that allow quick retrieval of sources.
b.
CATR sources are available on the Internet.
c.
CATR sources contain only secondary sources of tax law.
d.
CATR sources require less space and maintenance than print services.
74. During the past week, Dennis contacted his CPA to obtain advice on the most advantageous way to make a generous
contribution to the accounting program at his alma mater. The CPA's work is
a.
A tax planning situation.
b.
A tax compliance situation.
c.
A closed-fact situation.
d.
A mediation situation.
e.
An unknown-fact situation.
75. In planning situations, tax research is undertaken
I.
To always attempt to minimize taxes.
II.
Considering the client's nontax objectives.
III.
To find the best way to accomplish a desired result.
IV.
Considering the client's tax objectives.
a.
Only statement I is correct.
b.
Only statement IV is correct.
c.
Statements II and III are correct.
d.
Statements II, III, and IV are correct.
e.
Statements I, II, III, and IV are correct.
76. Greene is an individual taxpayer residing in Colorado (the Tenth Circuit). She has a disagreement with the IRS on a
transaction. Her former accountant told her that she has "less than a 50/50 chance of winning." However, she was recently
told of one case with similar facts that was decided in a way that would favor Greene. The U.S. Circuit Court of Appeals
for the Fifth Circuit decided that case. If Greene takes her case to the U.S. Tax Court, should she feel confident of
prevailing? Explain.
77. Describe the steps of the tax research process.
78. Rewrite each of the following citations in proper form:
a.
Subsection (b) of the third treasury regulation issued under Code Section 614 (Income Tax).
b.
Revenue Ruling 72-151, found on page 88 of the second cumulative bulletin of 1972.
c.
Metropolitan Laundry Co., case 52-1 USTC 9129 Vol 100 Federal Supplement at page 803
District Court of California.
d.
Henry M. Rodney (Tax Court 1969), volume 53 Reports of the U.S Tax Court, page 287.
e.
Paragraph 3 of subsection b, Section 217 of the Internal Revenue Code of 1986.
79. Taxpayers may choose one of several different courts in which to initiate litigation. Discuss the pros and cons of the
different trial level courts.
80. This problem requires determining the type of tax law authority and the relative importance within that authority
category. Indicate "1" for the highest-ranking item within each category. Indicate "2" for the next-highest ranking item
within each category. Each column may have zero, one, or more items ranked.
Legislative
Judicial
Administrative
Secondary
Internal Revenue Code
Treasury Regulations
US Constitution
Standard Federal Tax Reporter
(CCH)
Revenue Procedures
Supreme Court
Tax Court
81. Tax Research
a.
What are two of the trial courts that a taxpayer may use to litigate disputes with the IRS?
1.
2.
b.
Give two characteristics of each of the trial courts listed in part a.
1.
a.
b.
2.
a.
b.
c.
What are two things that you could expect to find in a Cumulative Bulletin?
1.
2.
d.
Give a major difference between a regulation and a revenue ruling.
82. Dwayne is upset by an IRS agent's decision after an audit of Dwayne's tax return. Dwayne tells you, "I'm taking this
case all the way to the Supreme Court." Comment on the appropriateness of Dwayne's statement.
Chapter 16
Match the primary source to its reporter.
a.
Tax Court Reports
b.
United States Tax Cases
c.
Internal Revenue Code
d.
Cumulative Bulletin
e.
Not a primary source
83. Appeals Court decision
84. Journal of Taxation
85. Regular Tax Court decision
86. Revenue Ruling 86-457
87. Tax statute
Match each statement with the correct term below.
a.
Where federal tax legislation generally originates.
b.
Has jurisdiction over all tax matters in the U.S. Senate.
c.
The committee responsible for initial hearings and deliberations on a tax bill.
d.
Responsible for negotiating a resolution of the differences in the House and Senate versions of a tax bill.
e.
The agency within the administrative branch of government with overall responsibility for administration of tax
law.
f.
Oversees the operation and administration of the tax system as a whole, and prepares a general explanation of any
tax bill signed by the President.
88. Finance Committee
89. House of Representatives
90. Joint Conference Committee
91. Joint Committee on Taxation
92. Treasury Department
93. Ways and Means Committee
