WORKING WITH THE TAX LAW: CHAPTER 2 TEST
  1. Which of these statements is true?
    1. The federal government's authority for levying an individual income tax emanates from the 16th Amendment to the Constitution.
    2. The Internal Revenue Code, first codified in 1939, was most recently recodified in 1986.
    3. Although administrative sources of the law typically originate in the House of Representatives' House Ways and Means Committee, they may also originate in the Senate as riders to other legislative proposals.
    4. When the House and Senate versions of a tax bill differ, the Joint Conference Committee works out a compromise tax bill that satisfies both the House and the Senate.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  2. Which of these statements is true?
    1. The Committee Reports accompanying proposed legislation are valuable sources for ascertaining the intent of Congress.
    2. A tax bill has a greater likelihood of being changed in the House than it does in the Senate because each representative has considerable latitude to make amendments to the bill.
    3. The President must sign a tax bill before it can become law.
    4. The Internal Revenue Code is organized as follows: Title 26; Subtitles; Chapters; Subchapters; Paragraphs; Subparagraphs; Sections; Subsections; Parts, and Subparts.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  3. Which of these statements is true?
    1. Judicial decisions interpreting provisions of the Internal Revenue Code of 1939 or 1954 are no longer of any value in interpreting to the most recent version of the Internal Revenue Code.
    2. A section-based reference is necessary but not sufficient for uniquely identifying a particular portion of the Code.
    3. The reference §280A is interpreted to mean section 280A while the reference §212(1) is interpreted to mean section 212 paragraph 1.
    4. In one-third of the conflicts reaching the Tax Court, the Court could not discern the intent of the Code.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  4. Which of these statements is true?
    1. Statutory sources of the law clarify the Code the and emanate from the Treasury or one of its instrumentalities.
    2. A Regulation clarifying §267 of the Code (a section dealing with an individual income tax matter) would be cited, at least in part, as Reg. §20.267.
    3. Revenue Rulings, Revenue Procedures, Letter Rulings, and Determination Letters are promulgated by the National Office of the Internal Revenue Service while Final, Temporary, Temporary-Proposed, and Proposed Regulations are promulgated by the Treasury Department.
    4. All sources of the law promulgated by the Treasury are published in the Federal Register and then reproduced in several major tax services.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  5. Which of these statements is true?
    1. All sources of law promulgated by the Treasury's instrumentalities are, as a matter of law, made available for public inspection after identifying details are deleted.
    2. Since they interpret the Code, Regulations, Revenue Rulings, and Revenue Procedures are numbered in the same sequence as the Code.
    3. Revenue Rulings deal with the internal management practices and procedures of the IRS.
    4. Legislative Regulations are promulgated by Congress and as such carry greater authority than either Procedural Regulations or Interpretive Regulations.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  6. Which of these statements is true?
    1. The set of sources possessing substantive authority for purposes of the Courts is more restrictive than the set of sources possessing substantive authority for purposes of the IRS.
    2. Because they carry the force and effect of law, the Code and the Regulations are considered substantive authority by the Courts.
    3. This ranking correctly reflects the relative authority of the indicated tax law sources: Code > Treaties = Final Regulations = Temporary/Proposed Regulations > Temporary Regulations > Proposed Regulations.
    4. Tax law promulgated by the Treasury's instrumentalities has less authoritative validity than does tax law promulgated by the Treasury.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  7. Which of these statements is true?

    1. a. Letter Rulings may be relied upon as substantial authority in dealing with the IRS by any taxpayer that faces the same controlling facts as those appearing in the Letter Ruling.

    2. b. The terms "Treasury Decisions" are strictly synonymous with the terms "Final Regulations".

    3. c. Revenue Rulings are published to provide precedents to be used in the disposition of other cases and may be relied upon by taxpayers for such purpose.

    4. d. Information appearing in the Cumulative Bulletin has already appeared once before in the Internal Revenue Bulletin.

    5. e. All of them.

    6. f. All but one of them (specify all true responses).

    7. g. More than one, but not all but one, of them (specify all true responses).

    8. h. None of them.


  8. Which of these statements is true?
    1. The Cumulative Bulletin is organized by Code Section while the Internal Revenue Bulletin is organized chronologically.
    2. Determination Letters, Technical Advise Memorandums, General Council Memoranda, and Actions on Decisions all constitute substantial authority in dealing with the IRS for purposes of both the accuracy-related penalty and traditional legal research.
    3. Letter Rulings and Technical Advice Memoranda deal with taxpayers' completed transactions while Determination Letters deal with taxpayers' proposed transactions.
    4. The IRS publishes Actions on Decision in its Bulletins to announce its acquiescence or nonacquiescence to decisions promulgated by the Tax Court, the appellate courts, and the Supreme Court.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  9. Which of these references could be a valid citation for an administrative source of the tax law?
    1. Ltr. Rul. 9535053.
    2. Rev. Rul. 97-50, I.R.B. No. 53, 189.
    3. Prop. Reg. §2.
    4. §179(a)(1)(A).
    5. All of them.
    6. All but one of them (specify all correct responses).
    7. More than one, but not all but one, of them (specify all correct responses).
    8. None of them.

  10. Which of these references could be a valid citation for a statutory source of the tax law?
    1. §1.179-5(b)(2)(ii).
    2. TAM 9747001.
    3. GCM 9509031.
    4. Rev. Proc. 87-56, 1987-2 CB 674.
    5. All of them.
    6. All but one of them (specify all correct responses).
    7. More than one, but not all but one, of them (specify all correct responses).
    8. None of them.

  11. Which of these partial citations refers to a trial court's decision?
    1. 104 T.C. 378 (1995).
    2. 422 F.2d 1336 (Ct.Cls., 1970).
    3. 57 AFTR2d 69-1090 (CA-2, 1969).
    4. 36-1 USTC ¶9253 (USSC, 1935).
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  12. Which of these statements is true?
    1. In a challenge by the IRS, the burden of proof is on the IRS to show that a taxpayer's position is erroneous.
    2. In a court of original jurisdiction, a taxpayer is normally the petitioner or respondent.
    3. The Courts of original jurisdiction resolve matters of fact and then apply the appropriate law(s) while the Appeals courts almost always resolve disputes regarding the lower Courts' application of the law.
    4. When resolving tax disputes, the Courts decide in favor of the IRS more often than they do for taxpayers.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  13. Which of these terms refers to the notion that contemporary cases ought to follow previously determined cases having the same controlling set of facts?
    1. Stare decisis.
    2. Acquiescence.
    3. Golsen.
    4. Dicta.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  14. Louie Nomore, who lives in Arizona, is thinking seriously about litigating a tax deficiency of approximately $437,000. Which of these statements concerning that decision is true?
    1. Although Louie can take his case to any one of the trial courts, if he hates traveling and being inconvenienced, then this ranking (from worst to best) is relevant: Court of Federal Claims < Tax Court < District Court of Arizona.
    2. Only the Court of Federal Claims can take jurisdiction prior to Louie's payment of the deficiency.
    3. The advantageous precedence of the 9th Regional Circuit Court of Appeals is only available to Louie if he seeks jurisdiction in either the Tax Court or the District Court of Arizona.
    4. If he desires both a jury trial and judges with technical tax expertise, then Louie must seek jurisdiction with the Tax Court.
    5. e. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  15. Which statement concerning this citation is true? Hardin v. U.S., 70-2 USTC ¶9676, 23 AFTR2d 70-5852 (D.Ct. Miss., 1970), aff'd, rev'd, rem'd 72-1 USTC ¶9464, 29 AFTR2d 72-1446, 461 F.2d 865(CA-5, 1972).
    1. The District Court of Mississippi was the court of original jurisdiction, Hardin was the plaintiff, and the Government was the defendant.
    2. Though not cited, the District Court decision would also appear in the Federal Supplement.
    3. The 5th Regional Circuit Court of Appeals agreed with, disagreed with, and requested additional consideration of various portions of the trial court decision.
    4. The Government apparently disagrees with the position of the trial court decision.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  16. Which of these statements is true?
    1. Only the regional circuit and federal circuit courts of appeal promulgate en banc decisions.
    2. A reviewed decision refers to a lower court decision that has been scrutinized by an appellate court.
    3. The Federal Circuit Court of Appeals grants a writ of certiorari when it is willing to consider a decision promulgated by a lower Court.
    4. Because its a national court, the U.S. Tax Court decides the same issue in a consistent manner regardless of where in the nation that issue is being litigated.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  17. Which of these statements is true?
    1. Tax Court Regular Decisions tend to deal with novel applications of the tax law.
    2. Appeal from the Small Claims Division of the U.S. Tax Court is to the U.S. Tax Court while appeal from the Court of Federal Claims is to the Federal Circuit Court of Appeals.
    3. Given that the controlling facts are the same, a decision rendered by the Court of Federal Claims or the Supreme Court constitutes substantial authority for a taxpayer who lives in Wyoming.
    4. Given that the controlling facts are the same, a decision rendered by a U.S. District Court of Georgia or the Second Court of Appeals constitutes substantial authority for a taxpayer who lives in Wyoming.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  18. Which of these partial citations could be correct?
    1. 388 F3d 420 (D.Ct. Ut., 1997).
    2. Bausch & Lomb, Inc. v. Comm., 89 S.Ct. 167 (CA-11, 1991).
    3. Portland Manufacturing Co., 451 F.Supp. 1003 (USSC, 1995).
    4. William Hill, RIA T.C. Mem. Dec. ¶87,091.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  19. Which of these tax-related decisions could be found in either the USTC or the AFTR?
    1. A Tax Court regular or memorandum decision.
    2. A District Court or Court of Federal Claims decision.
    3. A Federal Circuit or Regional Circuit Appeals Court decision.
    4. A Supreme Court decision.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  20. Which of these tax sources constitute a primary source and thus substantial authority in dealing with the IRS?
      1. The Sixteenth Amendment to the Constitution.
      2. Tax treaty between France and the United States.
      3. Internal Revenue Code.
      4. Revenue Procedures and Rulings.
      5. General Council Memoranda (1995).
      6. Tax Court Memorandum Decision.
      7. Tax Notes article.
      8. Temporary Regulation (issued in 1993).
      9. District Court decision.
      10. Small Cases Division decision.
      11. The Blue Book.
      12. Committee Reports.
    1. Only one of them (specify correct response).
    2. More than one, but not all but one, of them (specify all correct responses).
    3. All but one of them (specify all correct responses).
    4. All of them.
    5. None of them.

  21. With regard to question number 20, which of those tax sources constitute substantial authority with regard to the accuracy-related penalty?
    1. Only one of them (specify correct response).
    2. More than one, but not all but one, of them (specify all correct responses).
    3. All but one of them (specify correct responses).
    4. All of them.
    5. None of them.

  22. With regard to question number 20, which of those tax sources constitute secondary sources?
    1. Only one of them (specify correct response).
    2. More than one, but not all but one, of them (specify all correct responses).
    3. All but one of them (specify all correct responses).
    4. All of them.
    5. None of them.

  23. Which of these statements is true?
    1. A reviewed decision has greater authority than a regular Tax Court decision.
    2. Relative to a The Code represents the last word on any tax issue.
    3. In a general sense, this ranking reflects the relative authoritative value of the judicial sources of tax law: Supreme Court > Court of Appeals > Tax Court Regular > Tax Court Memo > Claims Court = District Court > Small Claims Court.
    4. The Citator is a good resource for assessing the viability of tax-related Court cases, revenue rulings, and revenue procedures.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  24. Which of the of these activities constitute tax avoidance?
    1. Gwyn writes a $250 check as a charitable contribution on December 28, 1997, but does not mail the check to the charitable organization until January 10. Gwyn takes a deduction in 1997.
    2. Robert decided not to report interest income from a bank because it was only $11.75.
    3. Amy switches her investments from taxable corporate bonds to tax-exempt municipal bonds.
    4. Ted encourages his mother to save most of her Social Security benefits so that he can claim her as a dependent.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.

  25. Which of these items ar e probably found in the Cumulative Bulletin (CB)?
      1. Revenue Rulings.
      2. Technical Advice Memoranda.
      3. Letter Rulings.
      4. Temporary Regulations.
      5. Treasury Decisions.
      6. Committee Reports.
      7. General Council Memoranda.
      8. Revenue Procedures.
      9. Actions on Decisions.
      10. Revenue Acts.
      11. Technical Advice Memoranda.
      12. Determination Letters.
    1. Only one of them (specify correct response).
    2. More than one, but not all but one, of them (specify all correct responses).
    3. All but one of them (specify all correct responses).
    4. All of them.
    5. None of them.

  26. Which of these statements is true?
    1. The legislative reenactment doctrine refers to the tendency of the Courts to assume that Congressional approval is granted to long-standing regulations whose related Code sections have not been amended by Congress.
    2. A good research memo should tell the reader what was researched, the results of that research, and the justification for the recommendation made.
    3. The primary objective of effective tax planning, reducing the taxpayer's total tax bill, should only take place in the context of the taxpayer's legitimate business goals.
    4. A secondary objective of effective tax planning is to reduce or defer the tax in the current year by deferring the receipt of income and creating, increasing, or accelerating deductions.
    5. All of them.
    6. All but one of them (specify all true responses).
    7. More than one, but not all but one, of them (specify all true responses).
    8. None of them.


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