Dwnload Full South Western Federal Taxation 2016 Essentials of Taxation Individuals and Business Entities 19th Edition Raabe Solutions Manual PDF
Dwnload Full South Western Federal Taxation 2016 Essentials of Taxation Individuals and Business Entities 19th Edition Raabe Solutions Manual PDF
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CHAPTER 2
PROBLEMS
a. The Tax Court must follow its own cases, the pertinent U.S. Circuit Court of Appeals, and the
Supreme Court.
b. The Court of Federal Claims must follow its own decisions, the Federal Circuit Court of
Appeals, and the Supreme Court.
c. The District Court must follow its own decisions, the pertinent U.S. Circuit Court of Appeals,
and the Supreme Court.
2. (LO 1, 3) Smith, Raabe, Maloney, & Young, CPAs
5191 Natorp Boulevard
Mason, OH 45040
March 25, 2015
Mr. Butch Bishop
Tile, Inc.
100 International Drive
Tampa, Florida 33620
Dear Mr. Bishop:
This letter is in response to your request about information concerning a conflict between
a U.S. treaty with Spain and a section of the Internal Revenue Code. The major reason for treaties
between the United States and certain foreign countries is to eliminate double taxation and to render
mutual assistance in tax enforcement.
Section 7852(d) provides that if a U.S. treaty is in conflict with a provision in the Code, neither will
take general precedence. Rather, the more recent of the two will have precedence. In your case, the
Spanish treaty takes precedence over the Code section.
A taxpayer must disclose on the tax return any positions where a treaty overrides a tax law. There is a
$1,000 penalty per failure to disclose for individuals and a $10,000 penalty per failure for
corporations.
Should you need more information, feel free to contact me.
Sincerely,
Alice Hanks, CPA
Tax Partner
2-1
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3. (LO 1)
a. Treasury Regulations are issued by the U.S. Treasury Department, while Revenue Rulings are
issued by the National Office of the IRS. Both Regulations and Revenue Rulings are designed
to provide an interpretation of the tax law. However, Rulings do not have the same legal force
and effect as do Regulations. Usually, Rulings deal with more restricted problems. Rulings
“are published to provide precedents to be used in the disposition of other cases and may be
cited and relied upon for that purpose.” See Rev.Proc. 86–15, 1986–1 CB 544.
b. Revenue Procedures are issued in the same manner as are Revenue Rulings, but Procedures
deal with the internal management practices and requirements of the IRS. Familiarity with
these Procedures can increase taxpayer compliance and assist the efficient administration of
the tax law by the IRS.
c. Letter rulings are issued upon a request. They describe how the IRS will treat a proposed
transaction. Unlike Revenue Rulings, letter rulings apply only to the taxpayer who applies for
and obtains the ruling, and generally, “may not be used or cited as precedent” [§ 6110(k)(3)].
Letter rulings, used to be “private” (i.e., the content of the ruling was made available only to
the taxpayer that requested the ruling). However, Federal legislation and the courts have
forced the IRS to modify its position on the confidentiality of letter rulings. Such rulings now
are published by a number of commercial tax services.
d. Like letter rulings, determination letters are issued at the request of taxpayers. They provide
guidance concerning the application of the tax law. They differ from letter rulings in that the
issuing source is the taxpayer’s own District Director rather than the National Office of the
IRS. In addition, determination letters usually involve completed (as opposed to proposed)
transactions. Determination letters are not published, but are made known only to the party
making the request.
4. (LO 1, 2) The items would probably be ranked as follows (from lowest to highest):
5. (LO 1)
a. This is a Temporary Regulation; 1 refers to the type of Regulation (i.e., income tax), 956 is
the related Code section number, 2 is the Regulation section number, and T refers to
temporary.
b. Revenue Ruling number 15, appearing on page 975 of the 23rd weekly issue of the Internal
Revenue Bulletin for 2012.
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Working with the Tax Law 2-3
6. (LO 1) The main advantage of the U.S. Court of Federal Claims occurs when a taxpayer’s applicable
Circuit Court previously rendered an adverse decision. Such a taxpayer may select the U.S. Court of
Federal Claims because any appeal will be to the Federal Circuit.
One disadvantage of the U.S. Court of Federal Claims is that the tentative deficiency must be paid
before the Court will hear and decide the controversy.
The U.S. Court of Federal Claims is a trial court that usually meets in Washington, D.C. It has
jurisdiction for any claim against the United States that is based on the Constitution, any Act of
Congress, or any Regulation of an executive department.
July 8, 2015
You have three alternatives should you decide to pursue your $229,030 deficiency in the court
system. One alternative is the U.S. Tax Court, the most popular forum. Some people believe that the
Tax Court judges have more expertise in tax matters. The main advantage is that the U.S. Tax Court
is the only trial court where the tax need not be paid prior to litigating the controversy. However,
interest will be due on an unpaid deficiency. The interest rate varies from one quarter to the next as
announced by the IRS.
One disadvantage of the U.S. Tax Court is the delay that might result before a case is decided. The
length of delay depends on the Court calendar, which includes a schedule of locations where cases
will be tried. Another disadvantage is being unable to have the case heard before a jury.
The major advantage of another alternative, the U.S. District Court, is the availability of a trial by
jury. One disadvantage of a U.S. District Court is that the tentative tax deficiency must be paid before
the Court will hear and decide the controversy.
The Court of Federal Claims, the third alternative, is a trial court that usually meets in Washington,
D.C. It has jurisdiction for any claim against the United States that is based on the Constitution, any
Act of Congress, or any regulation of an executive department. The main advantage of the U.S. Court
of Federal Claims occurs when a taxpayer’s applicable Circuit Court previously rendered an adverse
decision. Such a taxpayer may select the Court of Federal Claims because any appeal will be to the
Federal Circuit instead. One disadvantage of the Court of Federal Claims is that the tentative
deficiency must be paid before the Court will hear and decide the controversy.
I hope this information is helpful, and should you need more help, please contact me.
Sincerely,
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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