SWFT Individual Income Taxes
43rd Edition
ISBN: 9780357391365
Author: YOUNG
Publisher: Cengage
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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.
The IRS utilizes different audits depending upon the circumstances. I have listed 4 different scenarios. Please identify the type of audit that the IRS will likely use. Only provide one type of audit per scenario, the best option for the IRS. a. Professor Abbie B. Comey had a large amount of itemized deductions and the IRS would like to see documentation of these deductions. b. Trumff Corporation is a publicly traded corporation and has many transactions and many of them are very complex. The transactions, with large tax consequences, has reduced the tax liability of the corporation to $750. It is a large national chain of hotels headquartered in Florida. c. Ivanna and Jarry make face masks for the rich and famous, resulting in an income from their small homebased business of $75,000 in 2020. A few items were noted on the tax return by the IRS, relating to the homebased mask making business. d . Joey and Jilly sold some investments that sparked the interest of the IRS. As a result,…
Knowledge Booster
Similar questions
- Indicate which of the following statements are true or false: ________The IRS is a division of the Treasury Department. ________The IRS has four major divisions. ________The IRS local offices process most individual tax returns. ________IRS Campus Processing Sites are the locations that taxpayers should call to obtain tax information. ________Taxpayers should have their CPAs keep their tax records to prevent the IRS from being able to summon their records. ________Most IRS audits are conducted through the mail.arrow_forwardIf 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_forwardIn 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_forward
- Statutory 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_forwardMatch the described job with the job title from 1. Revenue Officer 2. Tax Compliance Officer 3. Appeals Officer 4. Customer Service Representative 5. Revenue Agent 6. Special Agent 7. National Taxpayer Advocate 8. Deputy Commissioner 9. Chief Counsel Attorney Files a levy to get money from a taxpayer's bank account. Performs complex audits at a taxpayer's business Investigates tax evasion and conspiracy claims Performs audits on limited issues at IRS offices Writes IRS Regulationsarrow_forwardThe Taxpayer Advocate Service (TAS) can help taxpayers with what type of assistance? As a first step, rather than dealing with the IRS, when the taxpayer believes there are unusual circumstances involved. When the taxpayer feels the resolution applied by the IRS is unreasonable. If there is a financial difficulty, emergency, or hardship and the IRS needs to move faster than normal. When an audit results in a significant change and the deadline for appeal has passed. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.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_forwardExplain what is meant by determining the degree of correspondencebetween information and established criteria. What are the information and establishedcriteria for the audit of Jones Company’s tax return by an internal revenue agent? Whatare they for the audit of Jones Company’s financial statements by a CPA firm?arrow_forwardWhich of the following is the most common type of audit for an individual taxpayer? Oa. Correspondence audit Ob. Telephone audit Oc. Field audit Od. Office audit Oe. None of these choices are correct.arrow_forward
- Is 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_forwardThe following are included in the audit working paper current file. *A. Chart of accounts, audit program, working trial balanceB. Organizational chart, engagement letter, adjustmentsC. Lawyer’s letter, audit program, lead scheduleD. Lead schedule, bank confirmation replies, by-lawsE. None of themarrow_forwardWhich of the following is true if an auditor performs nonaudit services for a governmententity?a. The scope of the audit must be reduced so that the auditor does not audit the area forwhich the nonaudit work was performed.b. The auditor is prohibited from providing nonaudit work in areas directly related to theproduction of accounting information.c. The senior members of the government entity must document their review of the nonaudit service and indicate why it is appropriate for the auditors to perform this service.d. The scope of the audit cannot be reduced because the nonaudit work was performed bythe public accounting firm.arrow_forward
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