QUESTION 4 If a tax return preparer knows (or reasonably should know) that an un
ID: 2433129 • Letter: Q
Question
QUESTION 4
If a tax return preparer knows (or reasonably should know) that an understatement on the taxpayer's return is due to an "unrealistic position," the preparer is subject to a penalty equal to
A.
$5,000 or 75% of the gross income derived from preparing the return
B.
the greater of $1,000 or 100% of the gross income derived from preparing the return
C.
the greater of $1,000 or 50% of the advisor's fees derived from preparing the return.
D.
$1,000
QUESTION 5
Does the IRS need to comply with the requirements of § 7604(f) if a summons serves the dual purposes of investigating both a named taxpayer & unnamed taxpayer provided that the information sought is relevant to a legitimate investigation of the summoned taxpayer?
On 8/13 it was determined there is a typographical error and the above code section should read § 7609(f)
Yes
No
QUESTION 6
If the taxpayer files an amended return, the statute of limitations for assessment
A. is extended for two years after the date of filing the amended return.
B. is the later of 3 years from the date of filing the return or two years after the payment of tax
C. Is open indefinitely because the return is considered fraudulent as originally filed.
D.
is based upon the date of filing the original return
A.
$5,000 or 75% of the gross income derived from preparing the return
B.
the greater of $1,000 or 100% of the gross income derived from preparing the return
C.
the greater of $1,000 or 50% of the advisor's fees derived from preparing the return.
D.
$1,000
Explanation / Answer
ANSWER 4 : As per IRC 6694,"understatement of tax payer's liability by tax return preparer" the penality of tax preparer for understatement of taxpayer’s return due to "unrealistic position" is:
· Greater of $1000 or 50% of income derived from preparing the tax return.
Option C is correct
ANSWER 6: If the taxpayer files an amended return the statute of limitation for
assesment is:
option B : 3years from the date of filling of return or 2 years after payment of tax.