Reference no: EM132889465

Problem 1: Mikel prepared for compensation a Federal income tax return for Mona. Mona's return included an aggressive interpretation of the rules concerning the home office deduction. Mikel is not liable for a preparer penalty for taking an unreasonable tax return position if:

a. The tax reduction attributable to the disputed deduction did not exceed $5,000.

b. Mona is assessed her own penalty for an understatement of tax due to disregard of IRS rules.

c. The IRS found that the disputed deduction was frivolous, but Mona disclosed the position in an attachment to the return.

d. There was a reasonable basis for Mona's interpretation of the home office deduction rules, and Mona disclosed the position in an attachment to the return.

e. Mona pays the additional tax assessed by the IRS without protest.

Problem 2: When the taxpayer has not paid a tax assessment to the Treasury, the IRS can do the following without needing court approval:

a. Foreclose on the taxpayer's house.

b. Force the taxpayer to sign an Offer in Compromise.

c. Garnish the taxpayer's wages.

d. The IRS can do all of the above without court approval.

e. The IRS can do none of the above without court approval.