Robert decided not to file his return on April 15 because he
knew that he could not pay the balance due. He files his return on August 3,
paying the full $4,000 balance. What are Robert’s expected
late-payment/late-filing penalties?
Question 2
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Cynthia and Howard, married taxpayers filing a joint return,
have $100,000 in taxable income in 2015. They have 4 children (ages 4 through
12) who have no income that is taxable. If they can legally shift $2,000 in
taxable income to each child, how much does the family save in taxes?
Do not include commas in your answer.
Question 3
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Beta Corporation anticipates $800,000 of taxable income for
the year before considering additional projects. What marginal tax rate should
it use in evaluating a project that may generate $200,000 of additional income?
Question 4
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Your client, Ms. I. M. Gorgeous, is an aspiring actress. She
has managed to earn a living doing television commercials but was unable to get
the acting parts she really wanted. She decided to have botox injections in her
forehead and collagen enhancements to her lips. After these procedures, her
career improved dramatically and she received several movie offers. Ms.
Gorgeous is sure that she should be able to deduct the cost of the cosmetic
enhancements because she read about another actress having a face lift in 1988
and deducting the cost on her tax return as a medical expense. Can Ms. Gorgeous
deduct the cost of these procedures? [Research Aid: Section 213(d)(9)]
Select one:
a. Yes
b. No
Question 5
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For each of the following independent situations, identify
whether the item would be primarilya tax in performing tax planning, a nontax
factor, or both.
The taxpayer lost a quarter of her net worth when the
dot-com bubble burst and does not want to own any investments with risk such as
stocks.
The taxpayer hates to pay any federal income taxes and would
rather pay an equal amount of money to an accountant or attorney than pay taxes
to the federal government.
The taxpayer has a large capital loss carryforward from last
year.
Question 6
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Marlin Corporation must decide between two mutually
exclusive projects because it lacks sufficient personnel to complete both
projects. Each project takes two years to complete and the project selected
will be Marlin’s only source of taxable income for the two years. The first job
would generate $360,000 of revenues in the first year and $80,000 in the second
year. Marlin estimates that this job will incur $200,000 of expenses in the
first year and $40,000 of expenses in the second year. The second job will
generate $220,000 of revenues and $120,000 of expenses in each of the two years.
Assuming a 7 percent discount rate, which project should Marlin accept?
Select one:
a. The first job
b. The second job
Question 7
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Your clients, Sonny and his wife, Honey, believe in
worshiping Ta-Ra, the Sun God. To practice their religious beliefs, they take a
weeklong trip to Hawaii to worship Ta-Ra. The cost of this pilgrimage
(including airfare, hotel, and meals) is $2,800. Can Sonny deduct the cost of
this trip as a charitable contribution to his religion. [Research Aid: Kessler,
87 TC 1285 (1986)]
Select one:
a. No
b. Yes
Question 8
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Go to www.irs.gov (the IRS Web site) and locate Publication
971: Innocent Spouse Relief. What form must be filed to request innocent spouse
relief?
Question 9
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Maria is a single individual with taxable income of $75,000
in 2015. What marginal tax rate should she use to determine the tax savings
from a $2,000 deductible expense?
Question 10
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Alison accidentally omitted $40,000 of gross income from the
restaurant she owned on her 2014 tax return. The return showed gross income of
$150,000 when filed on October 15, 2015. When can the IRS no longer pursue
Alison with the threat of collection of the related tax, interest, and
penalties (assuming there was no fraud)? Express your answer as xx/xx/xxxx.
