1. X, a professional tax return preparer, prepared and signed a client's federal income tax return that resulted in a $600 refund. Which one of the following statements is correct with regard to an Internal Revenue Code penalty X may be subject to for endorsing and cashing the client's refund check?

A) X will be subject to the penalty if X endorses and cashes the check.

B) X may endorse and cash the check, without penalty, if enrolled to practice before the Internal Revenue Service.

C) X may endorse and cash the check, without penalty, if the amount does not exceed X's fee for preparation of the return.

D) X may not endorse and cash the check, without penalty, because the check is for more than $500.

2. Under Circular 230, for tax returns:

A) A practitioner can advise a client to take a tax return position that is frivolous only if the taxpayer is a member of an officially recognized tax protest organization.

B) A practitioner must return all client records at the request of the client.

C) A practitioner may rely on client-furnished information under any circumstances. The client is always right.

D) A practitioner must exercise due diligence in preparing tax returns and other documents, unless such due diligence is waived in writing by the client.

3. In preparing a client's current-year individual income tax return, a tax practitioner discovers an error in the prior year's return. Under the rules of practice, the tax practitioner:

A) Is barred from preparing the current year's return until the prior-year error is rectified.

B) Must advise the client of the error.

C) Is required to notify the IRS of the error.

D) Must file an amended return to correct the error.