P&P Module 2 Exam Questions

Does the Tax Court have jurisdiction to determine that TP overpaid income tax in the year properly before the Court in response to an IRS statutory notice of deficiency determining a deficiency of income tax?
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Does the Tax Court have jurisdiction to determine that TP overpaid income tax in the year properly before the Court in response to an IRS statutory notice of deficiency determining a deficiency of income tax?
Yes
Does the Tax Court have jurisdiction to determine a deficiency that exceeds the amount of the deficiency of income tax determined in the IRS statutory notice of deficiency?
Yes
The IRS issues to TP a statutory notice of deficiency with respect to one taxable year. The notice determines an income tax deficiency and also accuracy-related penalties pursuant to § 6662(a) and (b)(2). TP petitions the Tax Court to dispute the deficiency amount and the accuracy-related penalties. Does the Tax Court have jurisdiction as to the accuracy-related penalties?
Yes
The IRS conducted a §6330 hearing regarding TP, and subsequently the IRS sent to TP by certified mail a Notice of Determination denying relief to TP. The Notice was mailed to an incorrect address, which was not TP's last known address, and was returned to the IRS as undeliverable. Without changing the date listed on the Notice, the IRS remailed it to TP by regular mail to TP's correct address. TP received the Notice and petitioned the Tax Court within 30 days of (1) the date on which TP actually received the Notice and also (2) the date on which the Notice was remailed to TP. Does the Tax Court have jurisdiction?
Yes

NOTE: Case is Bongam ((146 TC 4 (2/11/16)) - the critical date is the subsequent date on which the notice is mailed to or actually received, not the date listed on the Notice.
TP, who provides tax advice to other persons, received from the IRS a notice and demand for penalty pursuant to §6694(a). TP petitioned the Tax Court to challenge the penalty. Does the Tax Court have jurisdiction if the petition is unrelated to a proceeding under §§6320 and 6330?
No
6) The IRS issued one statutory notice of deficiency asserting a deficiency of income tax in each of three taxable years of TP. Is such a notice for multiple years a proper notice for purposes of Tax Court jurisdiction as to each of the three years?
Yes
TP receives a statutory notice of deficiency and then timely petitions the Court. Before the Court takes any action with respect to the case, the IRS assesses the tax to which the petition relates, and TP files a motion asking the Tax Court to enjoin the assessment and collection of such tax. Does the Tax Court have jurisdiction to grant such a motion?
Yes
Following an examination, the IRS determined that individuals who perform services for TP were TPʹs employees during the years in question. Does the Tax Court have jurisdiction to consider whether the individuals are TPʹs employees, and, if so, determine the amount of Subtitle C employment taxes owed by TP as a result of that determination?
Yes
An IRS revenue agent informed TP, a sole proprietor who employed two individuals, that the agent believed TP underpaid TPʹs §3402 withholding taxes. TP petitioned the Tax Court for a review of the asserted underpayment.
No
The IRS issues to TP a statutory notice with respect to one taxable year. The notice determines an income tax deficiency and also accuracy-related penalties pursuant to §6662(a) and (b) (2). TP petitions the Tax Court to dispute the deficiency amount and the accuracy-related penalties. Does the Tax Court have jurisdiction as to the accuracy-related penalties?
Yes
TP was an officer of a corporation that failed to pay FICA and employee income tax withholdings to the government. The IRS determined that TP was liable for the ʺtrust fundʺ amounts as a responsible person under §6672, and the IRS initiated a collection action against TP. An IRS appeals office issued a determination notice rejecting TPʹs settlement offer, which had proposed monthly installment payments by TP. TP filed a Tax Court petition pursuant to §6330(d). Does the Tax Court have jurisdiction with respect to the petition?YesTP, who provides tax advice to other persons, received from the IRS a notice and demand for penalty pursuant to §6694(a). TP petitioned the Tax Court to challenge the penalty. Does the Tax Court have jurisdiction?NoTP is a substantial contributor to a private foundation and receives a notice of deficiency pursuant to §4941 that claims a tax on self-dealing between TP and the private foundation. TP files a petition with the Tax Court contesting the deficiency. What is the Q?YesMay TP invoke the Courts' jurisdiction under §7436 only when the IRS has issued to TP a Letter 3523, Notice of Determination of Worker Classification, with respect to the tax periods in issue, and TP files, a Petition with Tax Court?No§6651Failure to File Tax Return or Pay TaxThe IRS issues to TP a statutory notice with respect to one taxable year. The notice determines an income tax deficiency and also an addition to tax pursuant to §6651. TP petitions the Tax Court to dispute the deficiency amount and the addition to tax. Does the Tax Court have jurisdiction as to the addition to tax?YesTP files a petition with the Tax Court to contest a proposed gift tax deficiency based on the IRS valuation of property transferred by gift by TP. Does the Tax Court have jurisdiction with respect to the proposed gift tax deficiency?YesTP files a petition with the Tax Court asserting a refund claim against the United States for overpaid income taxes. The IRS has not issued a statutory notice of deficiency to TP with respect to the taxable period as to which the refund claim is asserted. Does the Tax Court have jurisdiction?NoTP receives a statutory notice of deficiency and then timely petitions the Tax Court. Before the Tax Court takes any action with respect to the case, the IRS assesses the tax to which the petition relates, and TP files a motion asking the Tax Court to enjoin the assessment and collection of such tax. Does the Tax Court have jurisdiction to grant such a motion?YesTP litigated a case in the Tax Court, and TP then appealed the adverse decision. On appeal, the decision was reversed in part and remanded to the Tax Court for further proceedings. During these further proceedings in the Tax Court, TP moves to dismiss for lack of jurisdiction because the deficiency notice was not timely. Should the Tax Court grant the motion to dismiss because of lack of jurisdiction?NoA was never appointed executrix over B's estate by a State probate court, but A signed B's estate's Federal estate tax return as executor. The IRS asserted a deficiency in estate tax and· issued a notice of deficiency listing A as executor of B's estate. A filed a petition with the Tax Court for redetermination of the estate tax. A thereafter filed a motion to dismiss for lack of jurisdiction, arguing the Tax Court lacked jurisdiction because A was never appointed executrix so that the notice of deficiency had been sent to the wrong person. If the court determines that A was in possession of the property of B for purposes of §2203, does the Tax Court have jurisdiction?YesThe IRS issued to TP a notice of intent to levy and a notice of Federal tax lien filing, both for unpaid income tax assessed with respect to one of TP's previously-filed income tax returns. TP timely requested an administrative hearing under §§6320 and 6330, and TP set forth the grounds for TP's request in an attachment downloaded from the Internet website of an organization known to promote frivolous arguments and activities that delay or impede administration of federal tax laws. The IRS Office of Appeals sent a letter to TP stating that (1) the Office had determined that TP's request for a hearing consisted of §6330(g) frivolous positions and, (2) therefore, the Office was disregarding the request. The Office determination letter stated that the Office was returning TP's request to the IRS collection office and that collection action may proceed as if the hearing request was never submitted. TP timely filed a petition under §6330(d)(1) seeking review of the determination that the IRS collection office could proceed with collection. Does the Tax Court have jurisdiction to review the IRS §6330(g) determination?YesTP engages a person to provide services to TP. The IRS determines that the person is an employee of TP (for purposes of the employment tax provisions in subtitle C of the Internal Revenue Code) and so notifies TP by certified or registered mail. Does the TaxCourt have jurisdiction to determine whether the IRS determination is correct and the proper amount of employment tax under such determination?YesTP and Spouse were separated and in the process of divorcing. The IRS issued a joint notice of deficiency to them as husband and wife. TP filed a petition with the Tax Court, forging Spouse's signature. Spouse did not know about the Tax Court Petition. Does the Tax Court have jurisdiction with respect to Spouse?NoTP is properly before the Tax Court as a petitioner in response to an IRS statutory notice of deficiency. The IRS then issues a jeopardy assessment against the taxpayer as to a tax for a year properly before the court pursuant to TP's petition. Does the Tax Court have jurisdiction as to the jeopardy assessment?YesTP files a petition with the Tax Court to contest a proposed estate tax deficiency based on the IRS valuation of a closely held business interest included in the deceased taxpayer's gross estate. Does the Tax Court have jurisdiction with respect to the proposed estate tax deficiency?YesThe executor of an estate of a decedent who died in 2017, seeks a Tax Court determination of the estate's eligibility to elect to pay estate taxes in installments under §6166. Assuming the petitioner has exhausted all available administrative remedies as to §6166, does the Tax Court have jurisdiction with respect to the §6166 determination?YesTP files a petition with the Tax Court, and the court determines that TP made an overpayment of tax with respect to the relevant taxable year. The IRS has not refunded the overpayment even though more than 150 days have elapsed since the Tax Court's decision became final. TP seeks a Tax Court order that the IRS refund the overpayment. Does the Tax Court have jurisdiction?YesTP engaged in "listed transactions" as defined in Reg. §1.6011-4, but did not file the disclosure statement required by Reg. §1.6011-4(d). Pursuant to §6707A, the IRS assessed a $100,000 penalty for the failure to file the disclosure statement. The IRS also issued a deficiency notice with respect to that year, but the notice did not refer to the §6707A penalties. TP petitioned the Tax Court to challenge the deficiency and the §6707A penalty. Does the Tax Court have jurisdiction with respect to the §6707A penalty?No Note: Sydney and Lisa Smith (133 No 18 (12/21/09)) is a case of first impression deciding whether TC has jurisdiction over §6707A penalties - since they are not subject to deficiency procedures, the answer is noThe last day for TP to timely file a petition with the court was April 22, 2015. The Court received the petition via certified mail on April 29, 2015. The envelope containing the petition was properly addressed and had been deposited at a U.S. post office with sufficient postage prepaid through Stamps.com. Affixed to the envelope containing the petition was a Stamps.com postage label bearing the date April 21, 2015, the date on which the postage was paid and the label printed. The envelope did not bear a USPS postmark. No question on the PDF for this.Yes §7502 Note: Case is Lincoln Pearson and Victoria Pearson (149 TC 20 (11/29/17)) in which the answer is different than the 2016 cycle exam with Tilden (TC Memo 2015-188) which was reversed and remanded to the 7th Circuit, which reversed the Tax Court.(2 minutes) With respect to the issue of whether the Court has jurisdiction, describe (1) by whom may the issue be raised and (2) when the issue may be raised.Either party or the Court may raise the issue on whether the Tax Court has jurisdiction. It must be raised before the Court issues its opinion.(6 minutes) The Internal Revenue Code prescribes that no levy may be made on any property of any person unless the IRS has notified such person in writing of the right to a hearing before such levy is made. Describe and discuss these hearing rights.Collection due process falls under §§6320 and 6330, liens and levy actions. Once the IRS issues its "notice of intent" with the right to appeal, the taxpayer has 30 days to file Form 12153 and may file only one CDP for lien or levy on a taxable year; TP proposes collection alternatives (lien subordination, discharge or withdrawal or Offer in Compromise, Installment Agreement, or Currently Not Collectible status). When timely filed within 30 days, collection action must stop and the statute of limitations is tolled. After a CDP hearing with an independent Appeals officer, IRS issues Notice of Determination. If TP wants to further appeal to TC, may do so within 30 days, by filing petition. TC uses abuse of discretion standard unless TP raises (validly) the underlying tax liability, in which case the TC hears the matter de novo. If TP does not file the CDP notice timely, may still file for an equivalent hearing, but TC has no jurisdiction and the collection statute is not tolled. TP may challenge validity of the underlying tax only if TP had no prior opportunity to do so, and spousal defenses can be raised at the CDP hearing.(2 minutes) In a §6330 collection due process case before the Court, the Court reviews the IRS determination of whether the taxpayer qualifies for relief. Explain the standard of review applied by the Court of the IRS determination.If the underlying liability is properly at issue, the Tax Court hears the case de novo. If the TP had a prior opportunity for review of the liability, the case is heard under the abuse of discretion standard, where the Court will look to see if the IRS acted in an arbitrary or capricious manner or otherwise abused its discretion.(2 minutes) TP and Spouse filed a joint 1997 federal income tax return on which they reported, but did not fully pay, their tax liability arising from the sale of real property owned by Spouse. TP and Spouse divorced in 1998. Thereafter, TP filed with the IRS Form 8857, Request for Innocent Spouse Relief (And Separation of Liability and Equitable Relief), dated November 24, 2000, seeking equitable relief from joint and several liability with respect to the 1997 underpayment. On Sept. 13, 2001, the IRS issued a final notice of determination, denying the requested relief. On Mar. 7, 2007, TP filed a second request for equitable relief with respect to the same 1997 underpayment, providing more detailed (but not different) factual allegations. By letter dated May l, 2007, the IRS declined to reconsider the original denial of relief. On July 22, 2007, TP filed a petition with the Tax Court, and the IRS filed a motion to dismiss for lack of jurisdiction. Briefly discuss whether the Tax Court should grant the motion.Yes, the court should grant motion to dismiss. TP should have filed petition with the Tax Court in 2001 when initial notice of determination was issued.(1 minute) At a Tax Court trial regarding relief pursuant to §6015(f), may the petitioner introduce evidence that was not presented to, or included in, the administrative process before the IRS? State Yes or No.Yes NOTE: Suzanne Porter AKA Suzanne Holman (132 TC 11 (4/22/09)) - such cases are heard de novo and are not limited to the administrative record(1 minute) TP and Spouse did not report as income on their year 1 joint return amounts that Spouse had embezzled from Spouse's employer. After the embezzlement was discovered, TP and Spouse filed an amended tax return for year l that reported the embezzlement income. TP then applied to the IRS for relief from joint and several liability under §6015(f). The IRS issued a notice of determination denying TP's request, and TP filed a petition with the Tax Court under §6015(e) to review the IRS determination. TP and the IRS stipulated that no relief is available to TP under §§6015(b) and (c). TP's petition was a "nondeficiency stand-alone" petition; "nondeficiency" because the IRS accepted the amended return as filed and asserted no deficiency against TP, and "stand-alone" because TP's claim for innocent spouse relief was made under §6015 and not as part of a deficiency action or in response to an IRS decision to begin collecting TP's tax debt through liens or levies. Does the Tax Court have jurisdiction with respect to TP's petition? State Yes or No.Yes(1 minute) TP petitioned the Tax Court for relief pursuant to §6015(f). May TP properly introduce at the Tax Court trial evidence that was not presented to, or included in, the collection due process administrative process before the IRS? State Yes or No.Yes §6015 cases are considered de novo. (§6015 = relief from joint and several liability)(5 minute/s) A joint federal income tax return generally involves joint and several liability, but a spouse (or former spouse) may qualify under the Internal Revenue Code for relief from joint and several liability. Describe and discuss the qualification requirements and the relief available.§6015(b) Innocent spouse: joint return filed, understatement of tax, request made within 2 years of the start of the collection process, refund possible, requesting spouse must not know of the liability or had reason to know. §6015(c) Separation of Liability: must be separated or divorced, cannot live together, joint return filed, understatement of tax, request must be filed within two years of collection process start. §6015(f) Equitable relief: given the facts and circumstances, it is inequitable to hold requesting spouse liable. This may include economic hardship, or the requesting spouse did not know or had reason to know of the event. Burden of whether they had actual knowledge is on the government. Refund is possible. Must be requested prior to expiration of CSED if tax is unpaid; otherwise submitted prior to RSOL. Equitable relief is available if neither b nor c applies (10/10)(7 minute/s) Discuss the requirements that must be satisfied to authorize the Tax Court to award to a petitioner attorney's fees and costs.The requirements for recovery of costs/fees include: • the taxpayer meets a net worth requirement when the original petition is filed. Net worth must be less than $2 million for an individual, or $7 million for organizations, which must also have less than 500 employees. • the taxpayer must exhaust all administrative remedies within the IRS, • the taxpayer must not unreasonably protract proceedings, and • the taxpayer must be the prevailing party and must have substantially prevailed. The IRS position must not be substantially justified.(1 minute/s) Taxpayer, an attorney, represents him/herself in the Tax Court and prevails. State whether TP can recover, pursuant to §7430, fees for the services rendered. State Yes or No.No recovery of fees for self-representation. (In Frisch (87 TC 838 (1986)) the attorney was permitted to recover the costs of his expert witness but not an award for the value of his services).(2 minute/s) At what point in a Tax Court case must a request for an award of costs be submitted?in an agreed case, when the parties have settled all issues in the case, including costs, the award of costs should be included in a stipulated decision submitted by the parties. In an unagreed case where party substantially prevailed, the claim should be made by motion within 30 days after service of the opinion, or within 30 days after service of the pages of the transcript that contain findings stated orally, or after parties have settled all issues other than award for costs by motion accompanying the stipulation setting forth terms of the settlement.(2 minute/s) Counsel offers frivolous "tax protester" arguments in a Tax Court proceeding. If counsel does so in bad faith, briefly explain whether counsel may be liable for excess costs incurred by the IRS.Advancing frivolous arguments places counsel at risk for §6673 penalty, up to $25,000.