4.A taxpayer can choose either a tax credit or a tax deduction for foreign taxes

Question

4.A taxpayer can choose either a tax credit or a tax deduction for foreign taxes paid, whichever provides the greater tax benefit.

True

False

5.As a matter of administrative convenience, the IRS would prefer to have Congress increase (rather than decrease) the amount of the standard deduction allowed to individual taxpayers.

True

False

6.Taxpayers cannot use the cash or accrual method of accounting for tax purposes.

True

False

7.In cases of doubt, courts have held that tax relief provisions should be broadly construed against the IRS.

True

False

8.In cases of doubt, courts have held that tax relief provisions should be narrowly construed against taxpayers.

True

False

9.Which statement is false with respect to tax treaties?

a.Treaties may override a Code Section when in conflict.

b.The Code overrides the treaty when in conflict.

c.There is a $1,000 penalty per failure to disclose on the tax return where there is a direct treaty conflict for an individual.

d.There is a $10,000 penalty per failure to disclose on the tax return where there is a direct treaty conflict for a corporation.

e.None of these choices are correct.

10.What administrative release deals with a proposed transaction rather than a completed transaction?

a.Field Service Advice

b.Determination Letter

c.Letter Ruling

d.Technical Advice Memorandum

e.None of these choices are correct.

Explanation / Answer

4. True,

Taken as a deduction or credit,, foreign income taxes reduce U.S. taxable income. This can be as Deduct foreign taxes on Schedule A (Form 1040), Itemized Deductions

5. True,

This would reduce the number of assesses required to file income tax and thus would reduce the compliance burden on IRS for small tax payers. This way than can focus more on large tax payers.

6. False,

As per Publication 538, one can use

8. True

9. Option B, When there is a direct conflict, the most recent item will take precedence.

10. Option C, Letter Ruling

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