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Chapter 1:
Q-answers
18: The tax is imposed on the right to pass property at death, it is identified as an
estate tax; the tax is imposed on the right to receive property from a decedent, it
should be classified as an inheritance tax.
a. They may levy an inheritance tax and/or estate tax. But, some states may levy
neither tax.
b. Federal government only imposes an estate tax.

22: The federal income tax imposed on individuals follows a formula. However, the
federal corporate income taxs application doesnt require the computation of adjusted
gross income and does not provide for standard deduction, personal and dependency
exemptions.

30: a. The Medicare tax is not subject to any dollar limitation. I think that is fair to
everyone, because every employee should contribute to the Medicare tax for getting a
hospital insurance. There is not a free rider.
b. I think if someone earns more money such as someones income (including
self-employment income) above $200,000 (single filers) or $250,000 (married filing
jointly), they could be able to be imposed an additional .9 percent based on 1.45%
regular tax rate. They earn more from the society and contribute more to the society. I
redeem that is really fair, and the action can promote social harmony and stability.
37: a. Once a return is selected for audit, and then the taxpayer is notified. If the issue
involved is minor, the matter often can be resolved simply by correspondence (mail)
between the IRS and the taxpayer.
b. In addition, the types of audits are classified as either office audits or field audits.
Office audits usually is restricted in scope and is conducted in the facilities of the IRS.
However, field audits is contrast.
c. An examining agent issues a revenue agents report (RAR) that summarizes the
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findings, such as the result in a no change (the tax was correct) finding, a refund, or a
deficiency.
d. If a special agent joins (or take over from) the regular auditor during the course of
an audit, it means the IRS suspects fraud. If the problem has progressed to an
investigation for fraud, the taxpayer should retain competent counsel.
38I dont agree with Aldos conclusion. Because I think he can attempt to negotiate a
settlement with a higher level of the IRS. If a satisfactory settlement is not reached,
then Aldo can litigate the case in the tax court that is as a last resort.
40: a. The three years period begins to run from the due date of the return (always
April 15 for a calendar year individual taxpayer) due to a fact that the return is filed
on February 22, 2013 that is earlier than April 15, 2013.
b. The three years period will begins to run from the filing date of the return because
the return is late.
c. There is not a statute to apply to the situation. Even if the return was prepared early
on April 5, 2013, but it was never filed,
d. There is not a statute to apply to the condition because the return was never filed.
45: a. Jim is incorrect. Because the internal revenue code imposes penalties upon the
preparers of federal tax returns who violate proscribe acts and procedures.
b. If Jim refuses to file for 2009. I would not to prepare returns from 2010 to 2012 for
him. First, I must abide by the ethical standard as a accounting practitioner. Plus, I
have responsibility for advising the client to correct the error.

Chapter 2:
Q-answers
11: The rank is from the lowest to the highest authority: Letter ruling< Revenue
ruling< Legislative regulation< Interpretive regulation< Proposed regulation< Internal
revenue code.
12: a. Temporary regulations chapter 1, section 956-2T
b. Revenue ruling number 15, appearing on page 975 of the 23
rd
weekly issue of the
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Internal revenue bulletin for 2012.
c. 51
st
ruling issued during the 4
th
week of issuance of Letter ruling for 2002.
14: f. Travel time will probably be reduced.
18: a. A taxpayer has a dispute with the IRS. If the case involved amounts of $50,000
or less, the small case division of the U.S. tax court can deal with it without an appeal.
When you lose, you need to pay the deficiency and accrued interests.
b. If the case involved amounts more than $50,000, the taxpayer needs to appeal to
the U.S. tax court. Most cases are heard by one of the 19 regular judges who are
appointed from IRS or Treasury department positions. Your case will be heard and
decided at predetermined location and dates that will close to you. When you lose you
need to pay the deficiency and accrued interests.
c. The taxpayer appeals to the District court. The case will be heard and decided at the
District court of Michigan, and then they will give your rights to obtain a jury trial.
Before the District court have jurisdiction, you will be asked to pay the tax deficiency
assessed by the IRS and then sue for a refund. When you lose, you just dont have a
refund.
d. The taxpayer appeals to the court of federal claim. The case will be heard and
decided in the Washington D.C. by 16 judges. Then you will be asked to pay the tax
deficiency assessed by the IRS and then sue for a refund. When you lose, you just
dont have a refund.
24: Yes, there is before 1925. But right now, most of cases may apply to the Supreme
Court by Writ of Certiorari if the court agrees to hear the case. The court hears the
case that will follow the rules---to resolve a conflict among the courts of appeals or
the tax issue is extremely important. They may review any lower court ruling or just
sole discretion.
27: a. It is cited like: Felix and Loretta Rospond, T.C. Summary Opinion 201247.
b. It is like this citation below:
Turner v. U.S., 20041 USTC 60,478 (D.Ct. Tex., 2004) Explanation: Reported in
the first volume of the U.S. Tax Cases published by Commerce Clearing House for
calendar year 2004 (20041) and located at paragraph 60,478 (60,478).
c. In CHH form: U.S. v. The Donruss Co. 691 USTC 9167
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d. In CHH form: Estate of Gribauskas v. Comm. 20032 USTC 60,466
e. There are two ways in CHH form: Nick R. Hughes, T.C.Memo. 200994 The 94th
Memorandum decision issued by the Tax Court in 2009.
Nick R. Hughes, 97 TCM 1488 Page 1488 of Vol. 97 of the CCH Tax Court
Memorandum Decisions.
28: a. Action on Decision. d. Revenue procedure. g. Acquiescences to tax court
decisions.
33: b. Internal revenue code c. Internal revenue code
34: c. code section>g. recent temporary regulation>b. legislative regulation>f.
interpretive regulation>e. proposed regulation>d. revenue ruling>a. little ruling.