Preview Extract
COMMERCIAL TAX SERVICES
TEST BANK, Chapter 6
Multiple Choice
Choose the best answer for each of the following questions:
1. Which statement is CORRECT regarding commercial tax services?
a. They provide free access to all primary source tax materials.
b. They eliminate the need for reading primary tax law source materials.
c. They act as an index for and explanation of primary and secondary tax law source
materials.
d. All of the above statements are correct.
Answer: c
Rationale:
Commercial tax services serve as valuable resources for tax professionals by providing
comprehensive indexes and explanations of both primary and secondary tax law source
materials. They help users navigate complex tax laws and understand their implications
without the need to directly access every primary source material. Therefore, option c is
correct.
2. If you want to retrieve documents relating to amortizing legal fees paid for
organization of a partnership, which search query would yield the best results in RIA
Checkpoint?
a. amortizing and legal fees
b. amortiz* “legal fees” partnership
c. amortization organization not corporations
d. amortize and “legal fees” or partnerships
Answer: b
Rationale:
Option b provides the most specific and targeted search query. It includes the keywords
"amortiz*" to capture variations of the term "amortize," "legal fees" as a phrase to ensure
relevance, and "partnership" to specify the context of the search. This query is likely to
yield the best results related to the given topic.
3. Which statement is CORRECT regarding annotated tax services?
a. They are organized by Internal Revenue Code section.
b. They provide annotations, which are comprehensive, detailed analyses of related court
cases and administrative rulings.
c. They compile editorial explanations and evaluations of each Internal Revenue Code
section.
d. All of the above statements are correct.
e. Only (a) and (c) are correct.
Answer: e
Rationale:
Annotated tax services are typically organized by Internal Revenue Code section and
provide editorial explanations and evaluations of each section. While they may include
annotations of related court cases and administrative rulings, their primary focus is on
organizing and explaining tax law sections. Therefore, option e, which states that only
options (a) and (c) are correct, is accurate.
4. The starting point in approaching any tax research problem is to:
a. browse the Table of Contents.
b. formulate relevant tax questions and identify the issues associated with them.
c. evaluate the tax problem and suggest solutions to the taxpayers.
d. none of the above.
Answer: b
Rationale:
The correct approach to tax research is to first formulate relevant tax questions and
identify the issues associated with them. This helps in defining the scope of the research
and directing efforts towards finding appropriate solutions. Therefore, option b is the
correct starting point for tax research problems.
5. The key to effective tax research is:
a. finding your answer in free Internet sources.
b. avoiding preparer penalties.
c. finding the pertinent material necessary to arrive at an informed conclusion about the
best treatment of a tax problem.
d. all of the above.
Answer: c
Rationale:
The key to effective tax research is finding the pertinent material necessary to arrive at an
informed conclusion about the best treatment of a tax problem. While free internet
sources may sometimes be helpful, relying solely on them may not provide
comprehensive or accurate information. Avoiding preparer penalties is important but not
the primary focus of tax research. Therefore, option c is the most accurate statement.
6. The Federal Tax Coordinator (FTC) is published by:
a. RIA
b. CCH
c. Thomson Reuters Checkpoint
d. Westlaw
Answer: a
Rationale:
The Federal Tax Coordinator (FTC) is published by RIA (Research Institute of America),
making option a the correct choice.
7. Topical tax services:
a. provide annotations.
b. divide the tax law into transactions and related subject matter with underlying tax
principles as an organizing format.
c. have explanations that are organized by Internal Revenue Code section numbers.
d. All of the above.
Answer: b
Rationale:
Topical tax services typically divide the tax law into transactions and related subject
matter with underlying tax principles as an organizing format. While they may provide
annotations and explanations, their primary focus is on organizing tax law topics by
subject matter rather than by Internal Revenue Code section numbers. Therefore, option b
is the correct statement.
8. Which strategy would be the most useful to a tax researcher unfamiliar with a
particular tax topic?
a. Read the editorial explanation of the topic and the overview of the applicable law.
b. Perform a Google™ or Bing™ search.
c. Select a database to search.
d. None of the above.
Answer: a
Rationale:
The most useful strategy for a tax researcher unfamiliar with a particular tax topic would
be to read the editorial explanation of the topic and the overview of the applicable law
provided in tax research resources. This allows the researcher to gain a foundational
understanding of the topic before delving into more specific research methods. Therefore,
option a is the correct choice.
9. In some tax services, quotations marks are placed around the keywords to:
a. ensure that the maximum number of documents is retrieved.
b. indicate that the words should be searched separately.
c. maximize the number of documents retrieved.
d. indicate that the words should be searched as a phrase.
Answer: d
Rationale:
Placing quotation marks around keywords in tax services indicates that the words should
be searched as a phrase. This ensures that the search results are more precise and relevant
to the intended query. Therefore, option d is the correct explanation.
10. RIA’s annotated service, which formerly was known as PH Federal Taxes, is known
by the following acronym:
a. the U.S. Master Tax Guide
b. AFTR
c. USTR
d. None of the above.
Answer: c
Rationale:
RIA’s annotated service, formerly known as PH Federal Taxes, is known by the acronym
USTR (United States Tax Reporter). Therefore, option c is the correct choice.
11. The tax research platform ‘IntelliConnect’ is a product of which publisher?
a. Westlaw
b. CCH
c. BNA Tax & Accounting
d. None of the above.
Answer: b
Rationale:
CCH is the publisher of the tax research platform 'IntelliConnect,' making option b the
correct choice.
12. CCH’s flagship annotated tax service is entitled the:
a. Federal Tax Coordinator 2d.
b. Federal Tax Expert.
c. Standard Federal Income Tax Reporter.
d. United States Tax Reporter.
Answer: c
Rationale:
CCH's flagship annotated tax service is entitled the "Standard Federal Income Tax
Reporter," making option c the correct choice.
13. Which feature of IntelliConnect enables tax practitioners to access the prior year’s tax
law?
a. Standard Federal Income Tax Reporter
b. Tax Archives
c. Tax Research Consultant
d. IntelliConnect does not offer this service.
Answer: b
Rationale:
The feature of IntelliConnect that enables tax practitioners to access the prior year’s tax
law is called "Tax Archives," making option b the correct choice.
14. The Freedom of Information Act gives U.S. citizens the right to access:
a. IRS records provided they are unprotected from disclosure.
b. only published IRS documents.
c. records held by the Congress.
d. records held by the Courts.
e. All of the above.
Answer: a
Rationale:
The Freedom of Information Act (FOIA) gives U.S. citizens the right to access IRS
records provided they are unprotected from disclosure, making option a the correct
choice.
15. Which of the following is CORRECT regarding BNA?
a. BNA is a division of Westlaw.
b. BNA’s publications are available on most tax and legal services.
c. BNA is an independent, employee-owned publishing company.
d. Both (b) and (c) are correct.
Answer: d
Rationale:
BNA is an independent, employee-owned publishing company, and its publications are
available on most tax and legal services, making options b and c both correct.
16. If you performed a natural language search that returned 1000 documents, what could
you do to narrow your search?
a. Reduce the number of databases searched.
b. Search within results.
c. Use terms and connectors to better define the relationship between keywords.
d. All of the above actions would help narrow the search results.
Answer: d
Rationale:
All of the above actions would help narrow the search results by reducing the number of
irrelevant documents and focusing on more specific criteria, making option d the correct
choice.
17. Which of the following statements best describes Westlaw?
a. It has little value to accounting professionals.
b. It is legally oriented because it was designed by attorneys.
c. It is a division of LexisNexis.
d. None of the above statements accurately describe Westlaw.
Answer: b
Rationale:
Westlaw is legally oriented because it was designed by attorneys, making option b the
correct choice.
18. Which of the statements below is CORRECT with reference to WestlawNext?
a. It automatically recognizes the format of questions and processes the query
accordingly.
b. It recognizes citation formats entered in the search box.
c. It is a new search engine designed to simplify the research process of Westlaw.
d. All of the above statements are correct.
Answer: d
Rationale:
All of the above statements are correct with reference to WestlawNext, making option d
the correct choice.
19. What is Nexis?
a. It is LexisNexis’s legal research system.
b. It is LexisNexis’s news, financial, and business information service.
c. It includes the Tax Advisor – Federal Code Reporter.
d. None of the above statements accurately describe Nexis.
Answer: b
Rationale:
Nexis is LexisNexis’s news, financial, and business information service, making option b
the correct choice.
20. Which of the following statements is INCORRECT regarding Tax Center?
a. It is a service developed by LexisNexis designed exclusively for tax practitioners.
b. It utilizes the KeySearch system to assist users in searching by particular topics.
c. It allows tax researchers to search across all content in a single search.
d. It includes the analytical materials of CCH, BNA, and Tax Analysts.
Answer: b
Rationale:
Option b is incorrect. Tax Center does not utilize the KeySearch system to assist users in
searching by particular topics.
21. Boolean connectors are used:
a. to define the relationship between keywords.
b. as one method of entering search terms in commercial tax services.
c. in natural language searches.
d. only (a) and (b).
Answer: d
Rationale:
Boolean connectors are used to define the relationship between keywords in search
queries and are commonly used in commercial tax services as one method of entering
search terms. While natural language searches do not typically involve Boolean
connectors, they are essential for constructing precise searches in many research
databases. Therefore, options a and b are correct, making option d the correct choice.
True or False
Indicate which of the following statements are true or false by circling the correct answer.
1. Traditionally, commercial tax services are classified into two general types: primary
and secondary.
Answer: False
Rationale:
Traditionally, commercial tax services are classified into two general types: annotated
and topical.
2. The oldest national CPA firm in the United States is Deloitte.
Answer: True
Rationale:
Deloitte is indeed one of the oldest national CPA (Certified Public Accountant) firms in
the United States. It traces its roots back to the late 19th century when it was founded by
William Welch Deloitte in London. Deloitte expanded its operations to the United States
in the early 20th century, establishing itself as one of the prominent accounting firms in
the country. Therefore, the statement is true.
3. RIA Checkpoint will automatically use its Thesaurus and look for synonyms when you
put in a search query.
Answer: False
Rationale:
RIA Checkpoint does not automatically search for synonyms. You must use the
Thesaurus/Query Tool to apply synonyms.
4. RIA Checkpoint offers two main types of keyword searches: Terms & Connectors and
Natural Language.
Answer: True
Rationale:
RIA Checkpoint indeed offers two main types of keyword searches: Terms & Connectors
and Natural Language.
1. Terms & Connectors: This type of search allows users to specify relationships between
keywords using Boolean operators such as AND, OR, and NOT. It provides a more
structured and precise way to search for specific terms and their combinations within
documents.
2. Natural Language: Natural language search allows users to input search queries in
everyday language without using specific operators or connectors. The search engine then
interprets the query and retrieves relevant documents based on the context and meaning
of the words entered.
Therefore, the statement is true as RIA Checkpoint supports both these search methods to
accommodate different user preferences and search requirements.
5. The ‘Terms & Connectors’ type of keyword search is useful when a researcher is
unsure as to which keywords would be most effective
Answer: False
Rationale:
The ‘Natural Language’ type of keyword search is useful when a researcher is unsure as
to which keywords would be most effective.
6. The Federal Tax Coordinator is a topical service.
Answer: True
Rationale:
The Federal Tax Coordinator (FTC) is indeed a topical service. It provides
comprehensive coverage of various tax topics, offering detailed explanations, analysis,
and guidance on tax laws and regulations. Users can access information on specific tax
issues organized by topic, making it a valuable resource for tax professionals seeking indepth understanding and guidance on specific areas of tax law.
7. The only support recognized by the IRS and courts are primary sources and not the
editorial explanations of a tax service.
Answer: True
Rationale:
It is true that primary sources, such as statutes, regulations, case law, and IRS rulings,
carry the most weight in legal and tax proceedings. However, editorial explanations
provided by reputable tax services like the Federal Tax Coordinator (FTC) can still be
valuable for interpreting and understanding complex tax laws and regulations. While
primary sources are authoritative, editorial explanations can provide helpful analysis,
interpretations, and guidance that aid practitioners in applying tax laws correctly.
Nonetheless, it's essential to verify information from primary sources when making legal
arguments or decisions in tax matters. Therefore, the statement is true.
8. The “after” date option in IntelliConnect allows a researcher to keep a document for
later examination.
Answer: False
Rationale:
The “after” date option in CCH’s IntelliConnect allows a searcher to view only new law
that has occurred since the initial research. The Document Tray function allows
researchers to keep documents.
9. Keyword searches are not available when a researcher enters a tax service through the
Table of Contents in RIA Checkpoint.
Answer: False
Rationale:
It is possible to search through specific sections of the Table of Contents using keywords
in RIA Checkpoint.
10. Although most commercial tax services log off if there is a period of inactivity,
IntelliConnect may be left open all day.
Answer: True
Rationale:
IntelliConnect, unlike most commercial tax services, allows users to remain logged in
even during periods of inactivity. This feature enables users to access the platform
continuously throughout the day without having to log in repeatedly. It enhances user
convenience and efficiency by eliminating the need for frequent logins, making it suitable
for users who require frequent access to tax research resources.
11. The ResultsPlus, a unique feature of Westlaw, is a list of suggested analytical
materials relevant to a search topic.
Answer: True
Rationale:
ResultsPlus is indeed a unique feature of Westlaw. It provides users with a list of
suggested analytical materials that are relevant to the search topic. These suggestions
help users identify additional resources, such as articles, treatises, and other secondary
sources, that may offer valuable insights and perspectives on the legal issues being
researched. ResultsPlus enhances the research experience by offering curated
recommendations tailored to the user's specific search query, facilitating comprehensive
and thorough research. Therefore, the statement is true.
12. The Working Papers section of the BNA Tax Portfolios contain the Code,
Regulations, and Rulings discussed in the Portfolio.
Answer: False
Rationale:
The Working Papers section of BNA’s Portfolios contains practitioner checklists,
reproduced IRS forms, computation worksheets, sample draft agreements, and other
practice materials.
13. An Index search can be more effective than a keyword search because the researcher
has the benefit of the tax expertise of the indexer.
Answer: True
Rationale:
An Index search relies on the expertise of indexers who have categorized and organized
tax materials according to specific topics, making it easier for researchers to locate
relevant information. Indexers are trained professionals with tax expertise who
understand the nuances of tax law and can accurately categorize materials based on their
content. Therefore, utilizing an Index search allows researchers to leverage the expertise
of indexers, resulting in more precise and targeted search results compared to keyword
searches. Additionally, Index searches can help researchers discover relevant materials
they may not have found through keyword searches alone. Thus, the statement is true.
14. The BNA Tax Portfolios are unique because they are written by former IRS officials.
Answer: False
Rationale:
The BNA Tax Portfolios are unique because they are written by tax practitioners.
15. Paragraph numbers of the Federal Tax Coordinator should not be cited as support by
a tax professional.
Answer: True
Rationale:
Paragraph numbers within the Federal Tax Coordinator (FTC) should not be cited as
support by a tax professional. Unlike official legal citations, paragraph numbers in the
FTC may not carry the same weight of authority in legal or tax proceedings. It is essential
for tax professionals to rely on primary sources such as statutes, regulations, case law,
and IRS rulings for authoritative support in legal and tax matters. Citing paragraph
numbers from the FTC may not be considered sufficient or reliable in such contexts,
potentially weakening the argument or position presented. Therefore, the statement is
true.
16. LexisNexis offers a customized version of its services to academic institutions and
public libraries called LexisNexis Academic.
Answer: True
Rationale:
LexisNexis indeed offers a customized version of its services specifically tailored for
academic institutions and public libraries, known as LexisNexis Academic. This version
provides access to a wide range of academic and research materials, including legal,
business, and news sources, tailored to the needs of students, faculty, researchers, and
library patrons. LexisNexis Academic offers features and content curated for educational
and research purposes, making it a valuable resource for academic communities and
public libraries. Therefore, the statement is true.
Short Answer
1. Explain the difference between an annotated tax service and a topical tax service. Give
an example of each.
Answer: An annotated tax service is organized following the order of the Internal
Revenue Code. First the Code is presented, then committee reports, Regulations,
explanations, and lastly annotations of related court cases and administrative rulings. A
topical service divides the tax law into transactions or subjects with underlying tax
principles as an organizing format. It integrates a discussion of the primary and secondary
sources of the tax law into its editorial analysis. Examples of annotated services include
CCH’s Standard Federal Income Tax Reporter (SFITR) and RIA’s United States Tax
Reporter(USTR). Examples of topical services include RIA’s Federal Tax Coordinator
(FTC) and CCH’s Tax Research Consultant (TRC).
2. Why would a researcher use a Table of Contents or Index search instead of a keyword
search?
Answer: A search in the Table of Contents or in the Index is sometimes a very effective
method of limiting the number of documents retrieved and guaranteeing their pertinence
to the research project. Drilling down in the Table of Contents is a method that should be
used when the researcher has an idea of the location within the tax service where the
relevant documents may be located but is having a hard time selecting keywords.
An Index search also can assist a researcher who is unfamiliar with a tax issue because
the researcher can get the benefit of the expertise of the indexer in locating the primary
documents of interest. Because individuals do indexing, the tax meaning of terms in the
index is considered and the tax terms are put in context. It also is beneficial to start with
an Index search to help researchers identify effective terms for their general keyword
searches.
3. Describe the contents of a BNA Tax Portfolio. What features make these research
products unique?
Answer: Each BNA Portfolio begins with a Description providing a brief overview of the
topic and the order in which the materials in the Portfolio are presented. The Table of
Contents for the Portfolio follows this description. The remainder of the Portfolio
contains three sections: (A) Detailed Analysis, (B) Working Papers, and (C) Bibliography
and References. The Portfolio sections are updated in response to important tax
developments.
The BNA Tax Portfolios are unique because they are written by tax practitioners for tax
practitioners. Therefore, they have a tax practice focus. They include an analysis which
identifies potential pitfalls, probable IRS positions, effective tax planning techniques and
alternate means of structuring transactions in a more favorable manner. They also include
the Working Papers section which is the most unique feature. This section includes
practitioner checklists, reproduced IRS forms, computation worksheets, sample draft
agreements, and other practice materials.
4. What is the Freedom of Information Act and what does the IRS do to comply with it?
Answer: The Freedom of Information Act is a federal law that gives the public the right
to obtain records created by Federal agencies. IRS records are subject to public access
unless they are protected from disclosure. IRS complies with the Freedom of Information
Act by:
• Maintaining publicly available materials on the Internet in the IRS Electronic Reading
Room of www.irs.gov.
• Staffing the IRS Public Reading Room at IRS National Office in Washington, D.C.
• Responding to written requests for agency records not available in the Reading Room.
Essay Questions
1. What is the difference between a Terms & Connectors search and a Natural Language
search in RIA Checkpoint? Give an example of each.
Answer: In RIA Checkpoint, a Terms & Connectors search allows the researcher to use
Boolean connectors, punctuation, and other special search syntax to define the
relationship between keywords. To perform an effective Terms & Connectors search, the
researcher must understand the search rules and Boolean connectors available in the RIA
Checkpoint system. For example, a space between words is treated as an “and.”
Quotation marks must be used for a phrase search.
Example: To search for documents relating to the treatment of guaranteed payments to a
partner, you could enter the following Terms & Connectors search in RIA Checkpoint:
• partner and “guaranteed payments.”
To search in RIA Checkpoint using the ‘Natural Language’ feature, a researcher can enter
the relevant tax question in standard English without using Boolean connectors,
punctuation or any other special search syntax. The program will determine the key terms
for searching and the relationships among the words (i.e., connectors to apply). This type
of search is useful when a tax researcher is unsure as to which keywords would be the
most effective.
Example: To search for documents relating to the treatment of guaranteed payments to a
partner, you could simply enter the following question:
• What is the tax treatment of guaranteed payments made to a partner
2. Why would a practitioner need a commercial, subscription tax service when most tax
sources are available on the Internet for free?
Answer: A tax practitioner needs a subscription, commercial tax service even though
many primary tax sources are available on the Internet for free because subscription tax
services organize the large assortment of primary and secondary tax law sources into an
expert collection with numerous valuable-added features. Commercial tax services
include not only primary source documents, but also such features as editorial
explanations of the tax law, expert analyses, summaries and headnotes of court opinions
and rulings, an expert index, and a Thesaurus function. The collection and organization of
tax research materials facilitates more efficient, effective, and comprehensive searches
for solutions to tax problems, resulting in much faster and accurate searches. Also,
because tax practitioners are being more closely scrutinized by the IRS and the SEC,
conducting quality tax research that is carefully documented has become much more
crucial. Commercial tax services allow you to save your search history, create folders of
relevant documents, and check your knowledge of tax issues by consulting editorial
explanations and expert analysis.
Test Bank for Federal Tax Research
Roby B. Sawyers, Steven Gill, Debra Sanders, William A. Raabe, Gerald E. Whittenburg
9781111221645, 9781337282987, 9781285439396
