Question 1

If a CPA becomes aware of an error in a tax return, he or she must immediately notify the IRS.

Accepted Answer

A) True 
 B)False

Question 2

The three categories of modern tax practice include tax planning, tax compliance, and tax research.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is CORRECT about a CPA's responsibility with regard to tax return positions under Statements on Standards for Tax Services No. 1 SSTS No. 1) :

Accepted Answer

A)   A CPA may not base his or her position on authority that is not approved by the IRS under Section 6662 accuracy-related penalty) .
B)   A CPA may sign a return which has a tax position that has a realistic possibility of being sustained on the merits.
C)   A CPA may not sign a return which has any tax position that is not fully disclosed.
D)   All of the above statements are correct.

Question 4

An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.

Accepted Answer

A) True 
 B)False  True

Question 5

Which of the following statements is CORRECT regarding unauthorized practice of law?

Accepted Answer

A)   Taxpayers may draft not their own contracts.
B)   Taxpayers may not represent themselves in Tax Court.
C)   A CPA cannot express a legal opinion on a non-tax matter.
D)   A CPA cannot express a legal opinion on a tax matter.

Question 6

The ABA Model Code of Professional Responsibility has the force of law and covers all attorneys practicing in the United States.

Accepted Answer

A) True 
 B)False

Question 7

Regarding open transactions, which of the following statements is INCORRECT?

Accepted Answer

A)   the transaction is not yet completed
B)   the practitioner can suggest changes to achieve a better tax result
C)   a tax practitioner has some degree of control over the client's tax liability
D)   the practitioner can fix the problem by amending the client's tax return

Question 8

Explain the AICPA guidelines under SSTS No. 3 for relying without verification on taxpayer or third party information when preparing a tax return.

Accepted Answer

In preparing or signing a return, an AIC...

Question 9

Under Statements on Standards for Tax Services No. 3, SSTS No. 3)  a CPA preparing a tax return should perform all of the actions EXCEPT:

Accepted Answer

A)   independently confirm the accuracy of the taxpayer's information
B)   obtain additional information if the taxpayer's information appears to be incorrect or incomplete
C)   review the prior year's return when feasible
D)   determine when conditions for a deduction have been met

Question 10

Enrolled actuaries are allowed to practice before the IRS.

Accepted Answer

A) True 
 B)False

Question 11

Tax practice can be defined as the application of the tax laws to specific accounting situations.
Short

Accepted Answer

A) True 
 B)False

Question 12

The primary change made by the Sarbanes-Oxley Act which affects the practice of public accounting is:

Accepted Answer

A)   Public accounting firms may no longer provide any actuarial services.
B)   Accounting firms may no longer offer tax shelters.
C)   Auditors may never do tax compliance work for their clients.
D)   Public accounting firms may provide some nonaudit services to their audit clients if the services are approved in advance by an audit committee.

Question 13

What should an AICPA member do upon learning about an error in a prior year's tax return?

Accepted Answer

A member must advise the taxpayer prompt...

Question 14

A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer's estimates.

Accepted Answer

A) True 
 B)False

Question 15

The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.

Accepted Answer

A) True 
 B)False

Question 16

Due diligence, in essence, means a tax practitioner:

Accepted Answer

A)   must be efficient in performing his duties
B)   must give due respect to IRS officials
C)   should use reasonable effort to comply with the tax laws
D)   should charge reasonable fees for work performed for a client

Question 17

An EA must renew his or her enrollment card on a:

Accepted Answer

A)   5-year cycle
B)   3-year cycle
C)   2-year cycle
D)   Renewal is not required once an EA gets a card

Question 18

Explain which types of services a CPA can and cannot provide to avoid engaging in the unauthorized practice of law.

Accepted Answer

Frequently, legal and accounting questions are so intertwined in tax practice that they are difficult to distinguish. Over the years, a number of court cases have addressed the issue of unauthorized practice of law by accountants and other tax preparers. Though state and federal court cases have some inconsistent results, the current belief is that CPAs and other nonattorneys who practice law before the IRS do not engage in the unauthorized practice of law if they are careful not to provide any general legal services. Thus, the following types of general law activities should be avoided by nonattorneys:
▪Expressing a legal opinion on any non-tax matter. 
▪Drafting wills or trust instruments. 
▪Drafting contracts. 
▪Drafting incorporation papers. 
▪Drafting partnership agreements. 
As long as CPAs and other nonattorneys stay within the practice of tax and do not cross over into the practice of general law, they can avoid the problem of unauthorized practice of law.

Question 19

To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.

Accepted Answer

A) True 
 B)False  True

Question 20

CPAs may never disclose confidential taxpayer information under the AICPA rules.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Tax Practice and Ethics

If a CPA becomes aware of an error in a tax return, he or she must immediately notify the IRS.

Correct Answer
verified

The three categories of modern tax practice include tax planning, tax compliance, and tax research.

Correct Answer
verified

Which of the following is CORRECT about a CPA's responsibility with regard to tax return positions under Statements on Standards for Tax Services No. 1 SSTS No. 1) :

Correct Answer
verified

An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.

Correct Answer
verified
True

Which of the following statements is CORRECT regarding unauthorized practice of law?

Correct Answer
verified

The ABA Model Code of Professional Responsibility has the force of law and covers all attorneys practicing in the United States.

Correct Answer
verified

Regarding open transactions, which of the following statements is INCORRECT?

Correct Answer
verified

Explain the AICPA guidelines under SSTS No. 3 for relying without verification on taxpayer or third party information when preparing a tax return.

Correct Answer
verified
In preparing or signing a return, an AIC...
View Answer

Under Statements on Standards for Tax Services No. 3, SSTS No. 3) a CPA preparing a tax return should perform all of the actions EXCEPT:

Correct Answer
verified

Enrolled actuaries are allowed to practice before the IRS.

Correct Answer
verified

Tax practice can be defined as the application of the tax laws to specific accounting situations. Short

Correct Answer
verified

The primary change made by the Sarbanes-Oxley Act which affects the practice of public accounting is:

Correct Answer
verified

What should an AICPA member do upon learning about an error in a prior year's tax return?

Correct Answer
verified
A member must advise the taxpayer prompt...
View Answer

A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer's estimates.

Correct Answer
verified

The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.

Correct Answer
verified

Due diligence, in essence, means a tax practitioner:

Correct Answer
verified

An EA must renew his or her enrollment card on a:

Correct Answer
verified

Explain which types of services a CPA can and cannot provide to avoid engaging in the unauthorized practice of law.

To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.

Correct Answer
verified
True

CPAs may never disclose confidential taxpayer information under the AICPA rules.

Correct Answer
verified

Exam 1: Introduction to Tax Practice and Ethics

If a CPA becomes aware of an error in a tax return, he or she must immediately notify the IRS.

Correct AnswerverifiedShow Answer

The three categories of modern tax practice include tax planning, tax compliance, and tax research.

Correct AnswerverifiedShow Answer

Which of the following is CORRECT about a CPA's responsibility with regard to tax return positions under Statements on Standards for Tax Services No. 1 SSTS No. 1) :

Correct AnswerverifiedShow Answer

An ethical dilemma occurs when someone is faced with a situation for which there are no clearly defined answers.

Correct AnswerverifiedTrue

Which of the following statements is CORRECT regarding unauthorized practice of law?

Correct AnswerverifiedShow Answer

The ABA Model Code of Professional Responsibility has the force of law and covers all attorneys practicing in the United States.

Correct AnswerverifiedShow Answer

Regarding open transactions, which of the following statements is INCORRECT?

Correct AnswerverifiedShow Answer

Explain the AICPA guidelines under SSTS No. 3 for relying without verification on taxpayer or third party information when preparing a tax return.

Correct AnswerverifiedIn preparing or signing a return, an AIC...View AnswerShow Answer

Under Statements on Standards for Tax Services No. 3, SSTS No. 3) a CPA preparing a tax return should perform all of the actions EXCEPT:

Correct AnswerverifiedShow Answer

Enrolled actuaries are allowed to practice before the IRS.

Correct AnswerverifiedShow Answer

Tax practice can be defined as the application of the tax laws to specific accounting situations. Short

Correct AnswerverifiedShow Answer

The primary change made by the Sarbanes-Oxley Act which affects the practice of public accounting is:

Correct AnswerverifiedShow Answer

What should an AICPA member do upon learning about an error in a prior year's tax return?

Correct AnswerverifiedA member must advise the taxpayer prompt...View AnswerShow Answer

A member of the AICPA is not allowed to prepare tax returns that involve the use of the taxpayer's estimates.

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act addresses issues of corporate governance as well as the independence of auditors.

Correct AnswerverifiedShow Answer

Due diligence, in essence, means a tax practitioner:

Correct AnswerverifiedShow Answer

An EA must renew his or her enrollment card on a:

Correct AnswerverifiedShow Answer

Explain which types of services a CPA can and cannot provide to avoid engaging in the unauthorized practice of law.

To become an enrolled agent, a person must either pass a special IRS examination or must work for the IRS for at least five years.

Correct AnswerverifiedTrue

CPAs may never disclose confidential taxpayer information under the AICPA rules.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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In preparing or signing a return, an AIC...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A member must advise the taxpayer prompt...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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