Chapter 02 - CHAPTER 2—TAX PRACTICE AND RESEARCH...

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Unformatted text preview: CHAPTER 2—TAX PRACTICE AND RESEARCH TRUE/FALSE 1. Once a tax law is enacted by Congress, any official interpretations of the law are by subsequent court decisions. ANS: F Court decisions, IRS regulations and rulings also interpret tax laws. PTS: 1 REF: pp. 2-23 through 2-26 2. The House Ways and Means Committee holds hearings on proposed revenue bills initiated by the Sen- ate. ANS: F The House Ways and Means Committee structures a proposed bill initiated by the House of Represent- atives before it is presented for vote by the full House. PTS: 1 REF: pp. 2-20 and 2-21 3. The primary purpose of IRS regulations is to answer questions from taxpayers concerning specific tax problems. ANS: F The primary purpose of the Regulations is to explain and interpret particular Code sections. PTS: 1 REF: pp. 2-23 and 2-24 4. Although temporary regulations have the same binding effect as final regulations, proposed regulations have no force or effect. ANS: T Temporary regulations have the same binding effect as final regulations until they are withdrawn or re- placed. Proposed regulations have no force or effect; however, they do provide insight into how the IRS currently interprets a particular Code Section. PTS: 1 REF: p. 2-23 and 2-25 5. Unlike interpretative regulations, legislative regulations are not controlling on a court. Thus, the courts will not hesitate to substitute their own judgment for that of the Treasury Department. ANS: F Legislative regulations have the force and effect of law. A court reviewing the regulations usually will not substitute its judgment for that of the Treasury Department unless the Treasury has clearly abused its discretion. PTS: 1 REF: p. 2-24 6. Both revenue rulings and revenue procedures are first published in the Internal Revenue Bulletin and then eventually published in the Cumulative Bulletin. ANS: T Revenue rulings and revenue procedures are published in the weekly issues of the Internal Revenue Bulletin, and then are published semiannually in the Cumulative Bulletin. PTS: 1 REF: p. 2-26 7. The Internal Revenue Service may exercise discretion in determining whether to issue a letter ruling to a particular taxpayer. ANS: T The IRS has discretion about whether to rule or not and has issued guidelines describing the circum- stances for which it will issue a ruling. PTS: 1 REF: p. 2-26 and 2-27 8. A letter ruling, or private ruling, is an individual response to a taxpayer, and it is generally under- stood to apply to all taxpayers. ANS: F In fact, letter rulings apply only to the particular taxpayer asking for the ruling and are not applicable to all taxpayers. PTS: 1 REF: p. 2-27 9. The three trial courts where tax matters may be litigated—the U.S. District Court, the U.S. Court of Federal Claims, and the U.S. Tax Court—are all courts of original jurisdiction....
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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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Chapter 02 - CHAPTER 2—TAX PRACTICE AND RESEARCH...

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