6. Marty purchased 100 shares of QPX stock for $12,000 on March 15, 2015. He also paid his broker a $50 commission on the purchase. On August 30, 2015, he sold all 100 shares for $15,050. No commission was paid on the sale of the stock. Which of the following statements most accurate describes the effect of this sale on Martys tax liability?

a. He will have a capital gain of $3,050, which will be taxed at ordinary rates.

b. He will have a capital gain of $3,050, which will be taxed at lower capital gains rates.

c. He will have a capital gain of $3,000, which will be taxed at ordinary rates.

d. He will have a capital gain of $3,000, which will be taxed at lower capital gains rates.

NEW

7. For federal tax purposes, real property is depreciated using the ______________ convention.

a. mid-month

b. mid-quarter

c. half-year

d. whole-year

Criterion 6

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1. Fairness requires

a. disclosure of conflicts of interest.

b. impartiality.

c. intellectual honesty.

d. all of the above

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2. The Internal Revenue Code imposes a penalty on tax practitioners for any position taken on a return that is not supported by substantial authority. This penalty can be avoided if

a. the practitioner does not sign the return.

b. the position is not frivolous.

c. the position has a reasonable basis and is disclosed on the return.

d. none of the above

NEW

3. Which of the following statements is correct with respect to a clients request to a tax practitioner for the return of the clients records?

a. The practitioner may never return records of the client to the client, even if the client requests the prompt return of the records.

b. The existence of a dispute over fees always relieves the practitioner of his or her responsibility to return records of the client to the client.

c. The practitioner must, at the request of the client, promptly return the records of the client to the client unless applicable state law provides otherwise.

d. The practitioner must return the clients personal papers, but not tax reporting documents, such as the clients W-2s and 1099s.

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4. Which of the following is considered a tax return preparer?

a. A neighbor who assists in the preparation of a depreciation schedule.

b. A son who enters tax return information into a computer program and prints a return.

c. A woman who prepares tax returns in her home during filing season and accepts payment for her services.

d. A volunteer at a local church who prepares tax returns but accepts no payment.

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5. Tax preparers are prohibited from

a. advertising their services.

b. offering other services, such as bookkeeping, in addition to tax preparation.

c. offering discounts to repeat customers.

d. negotiating their clients refund checks.

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6. Sarah, a tax preparer, is reviewing the prior year return of a new client, she discovers a mistake that resulted in an understatement of the clients tax liability for that year. She should

a. report the matter to the IRS.

b. refuse to accept the new client.

c. advise the client that an amended return should be prepared.

d. include the unpaid amount in her calculation of this years tax.

NEW

7. Which of the following cannot be included in a tax preparers advertising?

a. The preparers professional credentials, such as CPA, EA, etc.

b. Areas of specialization, such as farm returns

c. The availability of e-filing services

d. The names of some of the preparers more prominent clients