1. Pursuant to Treasury Circular 230, which of the following statements about the return of a client's records is correct?

A) The existence of a dispute over fees generally relieves the practitioner of responsibility to return the client's records.

B) The client's records are to be destroyed upon submission of a tax return.

C) The practitioner may retain copies of the client's records.

D) The practitioner does not need to return any client records that are necessary for the client to comply with the client's federal tax obligations.

2. ABC Corp. retained X, CPA, to prepare its Year 6 income tax return. During the engagement, X discovered that ABC had failed to file its Year 2 income tax return. What is Walter's professional responsibility regarding ABC's unfiled Year 2 income tax return?

A) Prepare ABC's Year 2 income tax return and submit it to the IRS.

B) Advise ABC that the Year 2 income tax return has not been filed and recommend that ABC ignore filing its Year 2 return since the statute of limitations has passed.

C) Consider withdrawing from preparation of ABC's Year 6 income tax return until the error is corrected.

D) Advise the IRS that ABC's Year 2 income tax return has not been filed.

3. Which of the following acts by a CPA will not result in a CPA incurring an IRS penalty?

A) Failing, without reasonable cause, to sign a client's tax return as preparer.

B) Failing, without reasonable cause, to provide the client with a copy of an income tax return.

C) Negotiating a client's tax refund check when the CPA prepared the tax return.

D) Understating a client's tax liability as a result of an error in calculation.