Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 1, Problem 36DQ
To determine
Comment on the given statements with respect to the IRS
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Tax Drill - Types of Audits
Complete the following statements regarding the types of audit conducted by the IRS.
Taxpayers usually are able to settle routine tax disputes (e.g., queries involving the documentation of deductions) through with the IRS. However, are conducted in an office of the IRS. In most instances, the taxpayer is subject to . A is conducted by IRS agents at the office or home of the taxpayer or at the office of the taxpayer's representative.
Under what circumstance will the Internal Revenue Service initiate contact asking for personal or
financial information by email?
When the customer's identity has been marked as suspicious.
When the preparer of the return is found in violation of Circular 230.
When a return is filed via an ERO.
The IRS does not request personal information by email.
Which of the following procedures is MOST likely to be performed before the balance sheet date?
a.
Determine the date of the Letter of Representations
b.
Make a legal determination whether fraud has occurred.
c.
Search for unrecorded liabilities.
d.
Confirmation of receivables.
e.
Updating the predecessor's audit report date.
Chapter 1 Solutions
Individual Income Taxes
Ch. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - The Sixteenth Amendment to the U.S. Constitution...Ch. 1 - Prob. 4DQCh. 1 - How does the pay-as-you-go procedure apply to wage...Ch. 1 - Jane, a tax practitioner, has reviewed the law on...Ch. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQ
Ch. 1 - Sophia lives several blocks from her parents in...Ch. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - Prob. 18DQCh. 1 - Prob. 19DQCh. 1 - Prob. 20DQCh. 1 - Elijah and Anastasia are husband and wife who have...Ch. 1 - What is the difference between the Federal income...Ch. 1 - As to those states that impose an income tax,...Ch. 1 - Prob. 24DQCh. 1 - Prob. 25DQCh. 1 - Prob. 26DQCh. 1 - Prob. 27DQCh. 1 - Prob. 28DQCh. 1 - Contrast FICA and FUTA as to the following: a....Ch. 1 - Prob. 30DQCh. 1 - Prob. 31DQCh. 1 - Prob. 32DQCh. 1 - Prob. 33DQCh. 1 - Prob. 34DQCh. 1 - Serena operates a gift shop. To reduce costs of...Ch. 1 - Prob. 36DQCh. 1 - Prob. 37DQCh. 1 - Prob. 38DQCh. 1 - Prob. 39DQCh. 1 - Prob. 40DQCh. 1 - Prob. 41DQCh. 1 - Prob. 42DQCh. 1 - Prob. 43DQCh. 1 - Prob. 44DQCh. 1 - Prob. 45DQCh. 1 - In terms of tax policy, what do the following...Ch. 1 - Prob. 47DQCh. 1 - Prob. 48DQCh. 1 - Prob. 49DQCh. 1 - Prob. 50DQCh. 1 - Using information from this chapter as well as...Ch. 1 - Prob. 3RPCh. 1 - Prob. 4RP
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- If the audit does not turn out favorably: (Select all that apply.) A. Mrs. Hubbard can file an appeal with the auditor by presenting additional materials. B. Mrs. Hubbard can file an appeal with the auditor's manager. C. Mrs. Hubbard can go to a tax court. D. Mrs. Hubbard can file a formal appeal with the IRS.arrow_forwardWhich of the following types of audit evidence provides the least assurance of reliability? A. Receivable confirmations received from the client's customers B. prenumbered receiving reports completed by the client's employees C. Prior months' bank statements obtained from the client D. Municipal property tax bills prepared in the client's name.arrow_forwardStatutory auditor, during the regular audit, from incoming company A to draft letters that will be addressed to customers with a request that customers confirm by direct letter that they will send to the auditor the information stated in the letter to the door of the customers' account. , audited company A refused to compile and send them to its clients. In this case, what type of report will the regular auditor issue for the balance sheet audit?arrow_forward
- In the normal course of performing their responsibilities,auditors often conduct audits or reviews of the following:1. Federal income tax returns of an officer of the corporation to determine whether heor she has included all taxable income in his or her return.2. Financial statements for use by stockholders when there is an internal audit staff.3. A bond indenture agreement to make sure a company is following all requirementsof the contract.4. Internal controls at a casino to ensure the casino is in compliance with federal andstate regulations.5. Computer operations of a corporation to evaluate whether the computer center isbeing operated as efficiently as possible.6. Annual statements for the use of management.7. Operations of the IRS to determine whether the internal revenue agents are usingtheir time efficiently in conducting audits.8. Statements for bankers and other creditors when the client is too small to have anaudit staff.9. Financial statements of a branch of the federal…arrow_forwardThe official document issued by the CIR or his authorized representative authorizing the examination of taxpayer records is called: a.Authorization letter b.Letter Notice c.Letter of Authority d.Mission Order Which is NOT a power of the Commissioner? a.The power to abandon previous rulings b.The power to enter into a compromise c.The power to issue revenue regulations d.The power to issue rulings of first impressionarrow_forwardWhich of the following procedures would a CPA most likely perform in planning a financial statement audit?a. Make inquiries of the client’s lawyer concerning pending litigation.b. Perform cutoff tests of cash receipts and disbursements.c. Compare financial information with nonfinancial operating data.d. Recalculate the prior-years’ accruals and deferrals.arrow_forward
- What are the primary types of tax audits conducted by taxing authorities? a) Random audits and targeted audits b) Field audits and desk audits c) Pre - filing audits and post - filing audits d) Internal audits and external auditsarrow_forwardSTATEMENT 1: Most of the information included in the permanent file are accumulated during the initial audit. STATEMENT 2: The auditor may at his/her discretion make some information from the audit working papers available to clients. A. Only Statement 1 is incorrect B. Only Statement 1 is correct C. Both statements are incorrect D. Both statements are correctarrow_forwardChoose the correct. What is EDGAR?a. A system the SEC uses to reject registration statements that do not contain adequate information.b. The enforcement arm of the SEC.c. A system designed by the SEC to allow electronic filings.d. A branch of the government that oversees the work of the SEC.arrow_forward
- When a CPA knows that a tax client has skimmed cash receipts and not reported the incomein the federal income tax return but signs the return as a CPA who prepared the return, theCPA has violated which of the following AICPA rules of conduct?a. The Confidential Client Information Rule.b. The Integrity and Objectivity Rule.c. The Independence Rule.d. The Accounting Principles Rulearrow_forwardYou are involved with the audit of Jelco Company for year 1 and have been asked to consider the confirmation reply results indicated below. For each confirmation reply, select the proper action to be taken from the following possible actions: (Each of the "Action" items may be used once, more than once, or not at all.) (1)Exception; propose an adjustment. (2)Send a second confirmation request to the customer. (3) Examine shipping documents and/or subsequent cash receipts. (4)Verify whether the additional invoices noted on the confirmation reply pertain to the year under audit or the subsequent year. (5) Not an exception; no further audit work is necessary. Proper Action Customer Reply (and any audit action already taken) a. "We mailed the check for this on December 31." "We returned those goods on December 2." You have been able to determine that the goods were received by the client on December 29, but not recorded until January 2. c. "We also owe for two more invoices for purchases…arrow_forwardIs it allowed to send copies of the auditor's earlier paperwork to the client? If yes, are there any special criteria that auditors should review prior to delivering the client's documentation? At least three things should be mentioned.arrow_forward
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