Question 1

One Internal Revenue Code section enables shareholders in a small business corporation to obtain an ordinary deduction for any loss recognized on a stock investment.

Accepted Answer

A) True 
 B)False

Question 2

A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements is not income to the landlord. This rule is an example of:

Accepted Answer

A)   The wherewithal to pay concept.
B)   The tax benefit rule.
C)   The arm's length concept.
D)   A clear reflection of income result.
E)   None of these.F) All of the above
G) C) and D) A

Question 3

Which citation is considered to be a statutory legislative)  citation?

Accepted Answer

A)   Ltr. Rul. 199952058.
B)   Ann. 94-5, 1994-2 I.R.B. 39.
C)   Reg. § 1.1014-1c) 1) .
D)   § 351.
E)   None of these.F) C) and D)
G) D) and E)

Question 4

Proposed Regulations are published in the Federal Register.

Accepted Answer

A) True 
 B)False

Question 5

Internal Revenue Code Section 318, which deals with the definition of related parties with respect to stock redemptions, includes brothers and sisters in the related-party definition.

Accepted Answer

A) True 
 B)False

Question 6

Taxpayers may read Committee Reports to determine the intent of Congress.

Accepted Answer

A) True 
 B)False  True

Question 7

Proposed Regulations have the force and effect of law.

Accepted Answer

A) True 
 B)False

Question 8

If these citations appeared after a trial court decision, which one means that the decision was viewed favorably?

Accepted Answer

A)   Aff'd 633 F. 2d 512 CA-7, 1980) .
B)   Rem'd 399 F. 2d 800 CA-5, 1968) .
C)   Rev'd 914 F. 2d 396 CA-3, 1990) .
D)   Rev'd 935 F. 2d 203 CA-5, 1991) .
E)   None of these.F) B) and E)
G) A) and C)

Question 9

When there is a direct conflict between a tax treaty and the Internal Revenue Code, the Internal Revenue Code takes precedence.

Accepted Answer

A) True 
 B)False

Question 10

Which trial court's jurisdiction depends on the geographical location of the taxpayer?

Accepted Answer

A)   U.S. Tax Court.
B)   U.S. District Court.
C)   U.S. Court of Federal Claims.
D)   Small Cases Division of the Tax Court.
E)   None of these.F) A) and D)
G) All of the above B

Question 11

If a taxpayer decides not to pay a tax deficiency, he or she must go to which court?

Accepted Answer

A)   Appropriate U.S. Circuit Court of Appeals.
B)   U.S. District Court.
C)   U.S. Tax Court.
D)   U.S. Court of Federal Claims.
E)   None of these is available.F) C) and D)
G) None of the above

Question 12

The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United States Code.

Accepted Answer

A) True 
 B)False

Question 13

Explain the Golsen doctrine.

Accepted Answer

Because the Tax Court is a national cour...

Question 14

Treasury Decisions are issued by the Treasury Department to promulgate new Regulations.

Accepted Answer

A) True 
 B)False

Question 15

Indexation of various income tax components was eliminated by the Tax Cuts and Jobs Act of 2017.

Accepted Answer

A) True 
 B)False

Question 16

Internal Revenue Code § 6 involves gross income and § 7 outlines itemized deductions.

Accepted Answer

A) True 
 B)False

Question 17

A Revenue Ruling is a legislative source of Federal tax law.

Accepted Answer

A) True 
 B)False

Question 18

Regulations are first published in:

Accepted Answer

A)   Federal Register.
B)   Cumulative Bulletin.
C)   Internal Revenue Bulletin.
D)   I.R.S. Digest.
E)   All of these.F) C) and D)
G) A) and B)

Question 19

Interpret the following citation: 64-1 USTC ¶ 9618, aff'd in 344 F. 2d 966.

Accepted Answer

A)   A U.S. Tax Court Small Cases Division decision that was affirmed on appeal.
B)   A U.S. Tax Court decision that was affirmed on appeal.
C)   A U.S. District Court decision that was affirmed on appeal.
D)   A U.S. Court of Appeals decision that was affirmed on appeal.
E)   None of these.F) C) and E)
G) B) and C)

Question 20

The taxation part of the CPA exam REG) is now one-third essay.

Accepted Answer

A) True 
 B)False

Exam 1: Understanding and Working With the Federal Tax Law

One Internal Revenue Code section enables shareholders in a small business corporation to obtain an ordinary deduction for any loss recognized on a stock investment.

Correct AnswerverifiedShow Answer

A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements is not income to the landlord. This rule is an example of:

Correct AnswerverifiedA

Which citation is considered to be a statutory legislative) citation?

Correct AnswerverifiedShow Answer

Proposed Regulations are published in the Federal Register.

Correct AnswerverifiedShow Answer

Internal Revenue Code Section 318, which deals with the definition of related parties with respect to stock redemptions, includes brothers and sisters in the related-party definition.

Correct AnswerverifiedShow Answer

Taxpayers may read Committee Reports to determine the intent of Congress.

Correct AnswerverifiedTrue

Proposed Regulations have the force and effect of law.

Correct AnswerverifiedShow Answer

If these citations appeared after a trial court decision, which one means that the decision was viewed favorably?

Correct AnswerverifiedShow Answer

When there is a direct conflict between a tax treaty and the Internal Revenue Code, the Internal Revenue Code takes precedence.

Correct AnswerverifiedShow Answer

Which trial court's jurisdiction depends on the geographical location of the taxpayer?

Correct AnswerverifiedB

If a taxpayer decides not to pay a tax deficiency, he or she must go to which court?

Correct AnswerverifiedShow Answer

The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United States Code.

Correct AnswerverifiedShow Answer

Explain the Golsen doctrine.

Correct AnswerverifiedBecause the Tax Court is a national cour...View AnswerShow Answer

Treasury Decisions are issued by the Treasury Department to promulgate new Regulations.

Correct AnswerverifiedShow Answer

Indexation of various income tax components was eliminated by the Tax Cuts and Jobs Act of 2017.

Correct AnswerverifiedShow Answer

Internal Revenue Code § 6 involves gross income and § 7 outlines itemized deductions.

Correct AnswerverifiedShow Answer

A Revenue Ruling is a legislative source of Federal tax law.

Correct AnswerverifiedShow Answer

Regulations are first published in:

Correct AnswerverifiedShow Answer

Interpret the following citation: 64-1 USTC ¶ 9618, aff'd in 344 F. 2d 966.

Correct AnswerverifiedShow Answer

The taxation part of the CPA exam REG) is now one-third essay.

Correct AnswerverifiedShow Answer

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A

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True

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B

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Because the Tax Court is a national cour...
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