Question

1.Mary is single and has no dependents. She sold some stock and had a long-term capital
gain of $3,500. Her taxable income for 2019 is $34,500. What is the maximum tax rate for
her capital gain?
a) 0%
b) 20%
c) 15%
d) 28%

2. Jack, a tax preparer, had a client who was unable to return to the tax office in a timely manner
to review and sign his tax return, which Jack had prepared. Because Jack did not want his
client’s return to be late, he went ahead and signed the return as the taxpayer and transmitted
the return to the IRS. Was Jack’s action ethically acceptable?
a) Yes, his action was acceptable under the circumstances.
b) His action was partially acceptable under the circumstances, but not defensible.
c) No, his action was completely unacceptable.
d) His action was not ethically responsible, but he cannot be penalized.

3. While preparing Rudy’s return with Rudy sitting on the other side of the desk, Jack, the paid
preparer, received a phone call from another client, Luke Styles, whose return he had prepared
yesterday. Luke had forgotten the amount of his refund and wanted that information. Jack
said, “No problem, Mr. Styles” opened Luke’s folder and answered, “Your refund is $2,500.”
Was Jack’s action ethically acceptable?
a) Yes, his action was acceptable under the circumstances.
b) No, his action was completely unacceptable.
c) His action was partially acceptable under the circumstances.
d) His action was not ethically responsible, but he cannot be penalized.

Answer 1

1. For single filers, having taxable income less than $39,375, the long term capital gain tax rate is 0%. Hence, Mary, single tax filer, having taxable income $34,500, the long term capital gain tax rate is 0%. The answer is Option a) 0%.

2. A paid tax preparer can sign and transmit the tax return to IRS on behalf of Tax payer. Hence, Jack's action is ethically acceptable. The answer is Option a) Yes, his action was acceptable under the circumstances.

3. A tax preparer cannot disclose the tax information to any third party without client's consent except on disclosure to IRS, court order, report on commission of a crime etc., and can disclose with the written consent of the client. Hence, Jack's action was ethically not acceptable. The answer is option b) No, his action was completely unacceptable.