TAX 4001 Exam 1
#1 Tax Return Positions - ANS-file tax returns taking a position that has a realistic
possibility of being sustained if challenged (1 in 3 possibility)
#2 Try to Answer All Questions on Returns - ANS-sometimes there are situations where
the taxpayer does not have to answer all questions
#3 Procedural Aspects of Preparing a Return - ANS-a tax preparer may rely on
information provided without auditing unless the information appears to be incorrect
#4 Use of Estimates - ANS-estimates can be used, under some circumstance, on a filed
tax return
#6 Knowledge of Error - ANS-If a tax professional knows about an error in a tax return,
they must advise the taxpayer to file a correct return. The tax professional may not
inform the IRS without the taxpayer's permission
Accounting Methods for Tax - ANS-- must use cash or accrual method or a hybrid of the
two
Accrual Income - ANS-income when the all events test is met
Administrative Authorities - ANS-Treasury and IRS Pronouncements
AICPA Statements on Standards for Tax Services - ANS-- binding only for members of
the AICPA
- may not be used as the standard care required for non-AICPA member professionals
Assignment of Income Doctrine - ANS-requires income to be taxed to the taxpayer who
actually earns it
Average Tax Rate - ANS--the total taxes calculated divided by the taxable income
-represents a taxpayer's average level of tradition on each dollar of taxable income
=Total Tax/Taxable Income
-used in budgeting tax expense as a portion of income, determining what percent of
taxable income earned is paid in tax
