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Chapter 2 Working With The Tax Law
Chapter 2
Problems
32. LO.1 In which Subchapter of the Internal Revenue Code would one find information about corporate distributions?
a. Subchapter S.
b. Subchapter C.
c. Subchapter P.
d. Subchapter K.
e. Subchapter M.
33. LO.1, 4 Rank the items below from most reliable to least reliable:
a. Letter Ruling.
b. Legislative Regulation.
c. Code Section.
d. Revenue Ruling.
e. Proposed Regulation.
f. Interpretive Regulation.
g. Recent Temporary Regulation.
34. LO.4 Using the legend provided, classify each of the following tax sources:
Legend
P ? Primary tax source
S ? Secondary tax source
B ? Both
N ? Neither
a. Sixteenth Amendment to the U.S. Constitution.
b. Tax treaty between the United States and India.
c. Revenue Procedure.
d. General Counsel Memoranda (1989).
e. U.S. District Court decision.
f. Yale Law Journal article.
g. Temporary Regulations (issued 2014).
h. U.S. Tax Court Memorandum decision.
i. Small Cases Division of the U.S. Tax Court decision.
j. House Ways and Means Committee report.
35. LO.1, 2 Using the legend provided, classify each of the following citations as to publisher:
Legend
RIA ? Research Institute of America
CCH ? Commerce Clearing House
W ? West
U.S. ? U.S. Government
O ? Others
a. 83–2 USTC {9600.
b. 52 AFTR 2d 83–5954.
c. 67 T.C. 293 (1976).
d. 39 TCM 32 (1979).
e. 416 U.S. 938.
f. RIA T.C.Memo. {80,582.
g. 89 S.Ct. 501.
h. 2 Cl.Ct. 600.
i. 415 F.2d 488.
j. 592 F.Supp. 18.
k. 77–37, 1977–2 C.B. 568.
l. S. Rep. No. 1622, 83rd Cong., 2d Sess. 42 (1954).
36. LO.6 Using the legend provided, classify each of the following statements:
Legend
A ? Tax avoidance
E ? Tax evasion
N ? Neither
a. Sue writes a $707 check for a charitable contribution on December 28, 2016, but does not mail the check to the charitable organization until January 10, 2017. She takes a deduction in 2016.
b. Sam decides not to report interest income from a bank because the amount is only $19.75.
c. Harry pays property taxes on his home in December 2016 rather than waiting until February 2017.
d. Variet switches her investments from taxable corporate bonds to tax-exempt municipal bonds.
e. Mel encourages his mother to save most of her Social Security benefits so that he will be able to claim her as a dependent.
Research Problems
Research Problem 1. Determine the missing data in these court decisions and rulings.
a. Higgens v. Comm., 312 U.S._____ (1941).
b. Talen v. U.S., 355 F.Supp.2d 22 (D.Ct. D.C., ______).
c. Rev.Rul. 2008–18, 2008–13 I.R.B.______.
d. Pahl v. Comm., 150 F.3d 1124 (CA–9, ______).
e. Veterinary Surgical Consultants PC, 117 T.C._____ (2001).
f. Yeagle Drywall Co., T.C.Memo. 2001______.
Research Problem 2. When Oprah gave away Pontiac G6 sedans to her TV audience, was the value of the cars taxable? On Labor Day weekend in 2006, World Furniture
Mall in Plano, Illinois, gave away $275,000 of furniture because the Chicago Bears shut out the Green Bay Packers in the team’s football season opener at Lambeau
Field in Green Bay (26–0). Was the free furniture in the form of a discount or rebate taxable, or should the furniture company have handed the customers a Form 1099–
MISC?
Research Problem 3. You are interviewing a client before preparing his tax return. He indicates that he did not list as income $96,000 received as a recovery for false imprisonment. What should you do with respect to this significant recovery?
Research Problem 4. (1) Go to www.taxalmanac.org, and use the website to find § 61(a). What is defined in this Code Section? Is the definition broad or narrow? (2) Go to www.legalbitstream.com, and find the case in which Mark Spitz, the former
Olympic gold medalist, is the petitioner. Answer the following questions about the case:
a. What tax years are at issue in the case?
b. In what year was the case decided?
c. Did the court decide in favor of Mr. Spitz or the IRS?
d. Were any penalties imposed on Mr. Spitz? Why or why not?
Research Problem 5. Go to the U.S. Tax Court website (www.ustaxcourt.gov).
a. What different types of cases can be found on the site?
b. What is a Summary Opinion? Find one.
c. What is a Memorandum Opinion? Find one.
d. Find the “Rules of Practice and Procedure.”