7090957-Solutions - CHAPTER 25 TAX ADMINISTRATION AND...

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Unformatted text preview: CHAPTER 25 TAX ADMINISTRATION AND PRACTICE SOLUTIONS TO PROBLEM MATERIALS Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 1 Rates of audit Unchanged 1 2 Document matching and preparer penalties Unchanged 2 3 Issue ID Unchanged 3 4 Precedential value of letter ruling Unchanged 4 5 Burden of proof Unchanged 5 6 Audit cycles Unchanged 6 7 Audit strategy Unchanged 7 8 IRS payment of interest Unchanged 8 9 Taxpayer penalties and interest Unchanged 9 10 Tax administration and practice: terminology Unchanged 11 11 Penalty for false information with respect to New withholding 12 Statutes of limitations New 13 Practice before the IRS Unchanged 12 14 Ethical restrictions on tax practitioners Unchanged 13 15 Computation of penalties Modified 14 16 Failure to file and pay penalties; overall limitation; Unchanged 15 reasonable cause due to reliance on CPA 17 Negligence penalty Unchanged 16 18 Fraud and negligence penalties imposed Unchanged 17 19 Failure to file and pay penalties Modified 18 20 Overvaluation penalty Modified 19 21 Undervaluation penalty Unchanged 20 22 Overvaluation penalty Unchanged 21 23 Civil fraud Unchanged 22 24 Civil fraud Modified 23 25-1 25-2 2004 Comprehensive Volume/Solutions Manual Status: Q/P Question/ Present in Prior Problem Topic Edition Edition 25 Determining estimated payments: individual Unchanged 24 26 Determining estimated payments: corporation Unchanged 25 27 Penalty for failure to remit withholding deposits Unchanged 26 28 Statutes of limitations Unchanged 27 29 Statute of limitations; gross income omission Unchanged 28 30 Refund claim compliance Unchanged 29 31 Statute of limitations; refund claim Unchanged 30 32 Circular 230; representation before the IRS Unchanged 31 33 Preparer penalties Unchanged 32 34 Preparer penalties Unchanged 33 35 AICPA Statements on Standards for Tax Services Unchanged 34 Tax Administration and Practice 25-3 CHECK FIGURES 15. 16.a. 17. 18. 19.b. 20.d. 20.e. 20.f. 21.b. 21.c. 21.d. 22. 23. 24. Failure to file penalty $1,080. $280 failure to pay penalty. $1,900. $18,000 penalty for negligence. $1,785. $0 penalty due. $24,500. $105,000. $0 penalty due. $17,000. $90,000. $0 penalty due. $18,750. $7,500 fraud, $18,000 negligence. 25. 26.a. 26.b. 28.a. 28.b. 28.c. 29.a. 29.c. 30.a. 33.d. 33.e. 33.f. 34.c. $13,750 each. $42,500 each. $25,500 each. None. Seven years. Six years. $258,000. No statute of limitations. $12,000. Criminal penalty 7201. $250 penalty for no realistic possibility. Probably none. $30,000. 25-4 2004 Comprehensive Volume/Solutions Manual DISCUSSION QUESTIONS 1. Less than 0.5% of all individual tax returns are audited in a given tax year. However, certain types of both taxpayers and incomeincluding, for instance, high-income individuals (about 3%), cash-oriented businesses, real estate transactions, and estate- and gift-taxable transfers (15 to 30%)are subject to much higher probabilities of audit....
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7090957-Solutions - CHAPTER 25 TAX ADMINISTRATION AND...

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