Question 1

Bob Moon forms Moon Enterprises LLC (Limited Liability Company) during the year. What form must Moon Enterprises LLC file in order to elect to be taxed as a C corporation?

Accepted Answer

Form 8832 (Entity Classification Election)

Question 2

ABC Corporation is dissolved on July 9, 2004. What is the due date, without extensions, for the filing of the final corporate income tax return?

Accepted Answer

October 15, 2004

Question 3

Croaker, Inc. is a taxable domestic corporation. Dana Corporation, a large manufacturing corporation, owns 15% of Croaker, Inc.'s outstanding stock. In 2004, Dana Corporation received $100,000 in dividends from Croaker, Inc. Dana Corporation received no other dividends in 2004. Dana Corporation may deduct, within certain limits, what percentage of the dividends received?

Accepted Answer

70%

Question 4

York, Inc. directly owns stock of Ajax Corporation. To determine if Ajax Corporation is a member of a controlled group with York, Inc. as the common parent, York, Inc. must own at least what percentage of the voting and total value of the Ajax Corporation stock?

Accepted Answer

80%

Question 5

The Lux Corporation incurred $10,000 in start-up costs when it opened for business in 2004. What is the minimum period over which these expenses can be recovered?

Accepted Answer

60 months

Question 6

Corporations generally must make estimated tax payments if they expect their estimated tax (income tax less credits) to be equal to or more than:

Accepted Answer

$500

Question 7

A corporate payer of an individual shareholder dividend does not have the taxpayer identification number for that shareholder. What backup withholding percentage rate must the corporate payer use for this shareholder's dividend payments?

Accepted Answer

28%

Question 8

The board of directors of Walden Corporation authorized a year end distribution to its three shareholders. Each distribution would be equal in value but the shareholder could choose to receive the distribution in cash or corporate stock. If a shareholder chose to receive corporate stock, the distribution should be treated as:

Accepted Answer

A distribution of property.

Question 9

In 2000, Mark purchased 100 shares of Roman, Inc. for $10 per share. In 2004 Roman, Inc. completely liquidated and distributed $8,000 to Mark. Mark must report income from this distribution as:

Accepted Answer

Capital gains

Question 10

A fiduciary representing a dissolving corporation may file a request for prompt assessment of tax. Generally, this request reduces the time allowed for assessment to:

Accepted Answer

18 months

Question 11

With respect to unenrolled return preparers, which of the follow- ing statements is correct?

Accepted Answer

An unenrolled return preparer is an individual other than an attorney, CPA, enrolled agent, or enrolled actuary who prepares and signs a taxpayer's return as the preparer, or who prepares a return but is not required (by the instructions to the return or regulations) to sign the return.

Question 12

Margaret Smith is a CPA who is representing John & Mary Jones before the Wage and Investment Division of the Internal Revenue Service. The Service is questioning John & Mary on contributions that were listed on page 2 of their 2004 Form 1040. While reviewing the documentation provided by John & Mary, Margaret discovers contributions that were made to a non-qualified organization. What is the appropriate action for Margaret to take?

Accepted Answer

Margaret must advise John & Mary promptly of the omission and the consequences provided by the Internal Revenue Code and Regulations for such omission.

Question 13

The Office of Professional Responsibility can censure, suspend or disbar a practitioner from practice before the Internal Revenue Service for incompetence and/or disreputable conduct. Which one of the following is considered disreputable conduct?

Accepted Answer

All of the above.

Question 14

Josephine Jones, an Enrolled Agent, received a complaint from the Office of Professional Responsibility. Select the statement below that is correct with respect to the contents of the answer that Josephine will file in rebuttal to the complaint.

Accepted Answer

Josephine must specifically admit or deny each allegation set forth in the complaint, except that she may state that she is without sufficient information to admit or deny a specific allegation.

Question 15

How long must each practitioner maintain records of their completed CPE credits?

Accepted Answer

CPE credit information must be retained for a period of three (3) years following the date of renewal of enrollment.

Question 16

To maintain active enrollment to practice before the Internal Revenue Service, each individual enrolled is required to have his or her enrollment renewed. The Office of Professional Responsibility will notify the individual of his or her renewal of enrollment and will issue the individual a card to evidence enrollment. Which of the following statements about renewal of enrollment is correct?

Accepted Answer

Failure by an individual to receive notification from the Office of Professional Responsibility of the renewal requirement will not be justification for the failure to timely renew enrollment.

Question 17

Bethany timely filed her 2001 1040 tax return and paid the $2,000 tax as shown on the return at the time of filing. The return was subsequently examined and Bethany signed an agreement form for the proposed changes on August 20, 2003. She paid the additional tax due of $5,000 on September 30, 2003. In 2004, Tiffany located missing records which she believes would make $3,000 of the additional assessment erroneous. Which of the following statements accurately states the date by which Bethany must file a claim for refund to get the $3,000 back?

Accepted Answer

September 30, 2005, two years from when the additional tax was paid.

Question 18

In the process of preparing Orlo Corporation's 2002 return, Dave, an enrolled agent, provided to Orlo Corporation calculations he had prepared computing basis of property that was sold and reported on the 1120 Form 4797. Later, when Orlo Corporation's 2002 return was examined by the Internal Revenue Service, Orlo Corporation refuses to provide the Internal Revenue Service with the calculations, claiming that this was a privileged communication between Orlo Corporation and its federally authorized practitioner. Which of the following statements is true?

Accepted Answer

Orlo Corporation must provide the calculations to the Internal Revenue Service because privilege does not apply to a determination with respect to an item that will be presented to the government on an original return.

Question 19

Disputes involving what areas of taxation may not be resolved in the United States Tax Court?

Accepted Answer

Employment tax

Question 20

After the issuance of a Statutory Notice of Deficiency, failure to timely file a petition with Tax Court will result in which of the following?

Accepted Answer

You will be required to post a deposit before being allowed to request an extension for time to file a petition.

Quiz 18: Enrolled-Agent