c. The CPA answers estate tax questions for his client.
d. The CPA represents his client before the IRS.
ANSWER: a
25. Which of the following statements is CORRECT regarding the unauthorized practice of law?
a. Taxpayers may not represent themselves in Tax Court.
b. A CPA cannot express a legal opinion on a non-tax matter.
c. A CPA cannot draft wills or trust instruments.
d. Both b and c are correct.
ANSWER: d
26. Tax avoidance and tax evasion are both illegal.
a. True
b. False
ANSWER: False
27. Tax research is required only for tax planning, not preparing returns.
a. True
b. False
ANSWER: False
28. Tax planning has a higher likelihood of success when a tax practitioner is dealing with an open transaction instead of a closed transaction.
a. True
b. False
ANSWER: True
29. Paid tax return preparers must register with the IRS and obtain a PTIN.
a. True
b. False
ANSWER: True
30. Enrolled actuaries are allowed to practice before the IRS.
a. True
b. False
ANSWER: True
31. Tax practitioners (as defined by the IRS) are regulated by Circular 230.
a. True
b. False
ANSWER: True
32. Circular 230 bans tax practitioners from giving written advice on a federal tax issue based on the likelihood of an audit.
a. True
b. False
ANSWER: True
33. A member of the AICPA may never disclose confidential taxpayer information under the AICPA rules.
a. True
b. False
ANSWER: False
34. A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer’s estimates.
a. True
b. False
ANSWER: False
35. State Boards of Accountancy are the organizations with responsibility to license public accountants in each state.
a. True
b. False
ANSWER: True
36. The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.
a. True
b. False
ANSWER: True
37. The ABA Model Code of Professional Responsibility has the force of law and covers all attorneys practicing in the United States.
a. True
b. False
ANSWER: False
38. An attorney, CPA, or enrolled agent may use advertising to obtain clients under Circular 230.
a. True
b. False
ANSWER: True
39. If a CPA becomes aware of an error in a tax return, he or she must immediately notify the IRS.
a. True
b. False
ANSWER: False
40. A CPA can rely without verification on information given to the CPA by a taxpayer unless the information appears to be incorrect.
a. True
b. False
ANSWER: True
41. An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.
a. True
b. False
ANSWER: True
42. The three categories of modern tax practice include tax planning, tax compliance, and tax research.
a. True
b. False
ANSWER: False
43. To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.
a. True
b. False
ANSWER: True
44. Drafting wills is a part of a CPA’s professional duties.
a. True
b. False
ANSWER: False
45. Tax practice can be defined as the application of the tax laws to specific accounting situations.
a. True
b. False
ANSWER: True
46. Who may represent a taxpayer before the IRS in cases which go beyond the examination of the return?