Strayer ACC565 midterm exam (2015 version)/Strayer ACC565 midterm exam (2015 version)

  

Question 1

When a taxpayer contacts a tax advisor requesting advice as to the most advantageous way to dispose of a stock, the tax advisor is faced with

Answer

a restricted-fact situation.

a closed-fact situation.

an open-fact situation.

a recognized-fact situation.

Question 2

During the course of an audit, a CPA discovers an error in a prior return. According to the Statements on Standards for Tax Services, the CPA should

Answer

ask the client for permission to disclose the error to the IRS.

withdraw from the engagement.

inform the IRS of the error, regardless of whether the client grants permission.

correct the error in the current year’s tax return.

Question 3

A Technical Advice Memorandum is usually

Answer

an internal IRS document describing alternative legislative proposals.

part of a Tax Court decision.

requested by the taxpayer before entering into a taxable transaction.

issued by the national office in response to an audit request.

Question 4

Regulations are

Answer

equal in authority to legislation.

equal in authority to legislation if statutory.

presumed to be valid and to have almost the same weight as the IRC.

equal in authority to legislation if interpretative.

Question 5

In accordance with the rules that apply to corporate formation, which one of the following features does not make an issue of preferred stock “nonqualified”?

Answer

The shareholder can require the corporation to redeem the stock.

The dividend rate on the stock may not vary with interest rates, commodity prices, or other similar indices.

The corporation is either required to redeem the stock or is likely to exercise a right to redeem the stock.

The stock is limited and preferred as to dividends.