South-Western Federal Taxation 2022: Individual Income Taxes 45th edition by James C. Young Test ban

45. A major advantage of a flat tax type of income tax is its simplicity.
 a. True
 b. False
 
ANSWER:  True
 
46. The value added tax (VAT) has not had wide acceptance in the international community.
 a. True
 b. False
 
ANSWER:  False
 
47. If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.
 a. True
 b. False
 
ANSWER:  False
 
48. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
 a. True
 b. False
 
ANSWER:  True
 
49. An office audit by the IRS takes place at the office of the taxpayer.
 a. True
 b. False
 
ANSWER:  False
 
50. The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.
 a. True
 b. False
 
ANSWER:  True
 
51. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.
 a. True
 b. False
 
ANSWER:  True
 
52. If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is filed.
 a. True
 b. False
 
ANSWER:  False
 
53. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.
 a. True
 b. False
 
ANSWER:  False
 
54. If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.
 a. True
 b. False
 
ANSWER:  True
 
55. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
 a. True
 b. False
 
ANSWER:  True
 
56. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
 a. True
 b. False
 
ANSWER:  False
 
57. A calendar year taxpayer files his 2020 Federal income tax return on March 4, 2021. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2021. The refund need not include interest.
 a. True
 b. False
 
ANSWER:  True
 
58. For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).
 a. True
 b. False
 
ANSWER:  True
 
59. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.
 a. True
 b. False
 
ANSWER:  False
 
60. When interest is charged on a deficiency, any part of a month counts as a full month.
 a. True
 b. False
 
ANSWER:  False
 
61. For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.
 a. True
 b. False
 
ANSWER:  True
 
62. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The 20% negligence penalty will apply to $25,000.
 a. True
 b. False
 
ANSWER:  True
 
63. If a tax deficiency is attributable to fraud, the negligence penalty will not be imposed.
 a. True
 b. False
 
ANSWER:  True
 
64. The civil fraud penalty can entail large fines and possible incarceration.
 a. True
 b. False
 
ANSWER:  False
 
65. Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.
 a. True
 b. False