CTC Documentation & Legal Requirements 2

Question 1

Under IRC Section 6001, how long must a taxpayer generally retain records supporting a filed return?

Accepted Answer

3 years from the filing date or due date, whichever is later

Answer

1 year after filing

Answer

5 years from the transaction date

Answer

Indefinitely for all records

Question 2

A client claims a home office deduction. Which document is most critical to substantiate the exclusive-use requirement?

Accepted Answer

A floor plan or diagram with measurements of the dedicated workspace

Answer

Utility bills showing the home address

Answer

The mortgage statement for the property

Answer

Receipts for home office furniture purchases

Question 3

Which form must a taxpayer file to request additional time to pay a tax liability after an IRS assessment?

Accepted Answer

Form 9465

Answer

Form 2210

Answer

Form 4506-T

Answer

Form 8822

Question 4

When a business converts a personal asset to business use, what documentation is required to establish the depreciable basis?

Accepted Answer

Fair market value at the date of conversion and original cost documentation

Answer

Only the original purchase receipt

Answer

The insurance appraisal at time of purchase

Answer

A signed letter from the taxpayer stating the conversion date

Question 5

A tax practitioner signs a return as a paid preparer. What is the practitioner's primary legal obligation regarding document retention?

Accepted Answer

Retain a copy of the return or a list of taxpayers for 3 years from the return due date

Answer

Keep all source documents provided by the client for 7 years

Answer

Submit copies of all returns to the IRS within 60 days

Answer

Retain records only if the return includes Schedule C

Question 6

Which IRS publication provides guidance on what business records small business owners should keep?

Accepted Answer

Publication 583

Answer

Publication 15

Answer

Publication 334

Answer

Publication 946

Question 7

An employee receives a non-cash fringe benefit. What documentation must the employer maintain to properly exclude the benefit from wages under IRC §132?

Accepted Answer

A written policy describing the benefit program and evidence of business purpose

Answer

Only the employee's W-2 showing the benefit value

Answer

A notarized statement from the employee confirming receipt

Answer

Annual IRS approval letters for each excluded benefit