Chapter 2

Administrative Sources of Authority

Answers to chapter Problems
Answers to True or False Questions
1. True
2. False
3. False
4. True
5. False
6. False
7. False
8. True
9. False
10. False
2 Contemporary Tax Practice

Chapter 2 2013 CCH Incorporated. All Rights Reserved.

Answers to Fill in the Blanks Questions
11. 30
12. legislative
13. 18
14. Internal Revenue Manual
15. Revenue Procedure
16. employment
17. acquiescence
18. Revenue Ruling
19. Temporary, date of issuance
20. Field Service Advice
Textbook Solutions 3

2013 CCH Incorporated. All Rights Reserved. Chapter 2

Answers to Multiple Choice Questions
21. d.
22. a.
23. d.
24. e.
25. c.
26. c.
27. c.
28. b.
29. b.
30. d.
4 Contemporary Tax Practice

Chapter 2 2013 CCH Incorporated. All Rights Reserved.

Answers to Review Problems
31. Generally, Code Sec. 7805(b) states that a Regulation should be effective on the date in which such
Regulation is filed with the Federal Register.
32. Reg. 1.25A-3(a)(1)(ii).
33. Revenue Ruling 2006-52, 2006-2 CB 423.
34. Revenue Procedure 2005-16, 2005-10 IRB 674.

35. a. Your Appeal Rights and How to Prepare a Protest if you Dont Agree
b. Travel, Entertainment, Gift, and Car Expenses
c. Home Mortgage Interest Deduction
36. a. Type of regulation (income tax)
b. Code Section being interpreted
c. Chronological order of regulation; T indicates temporary
d. paragraph
e. subparagraph
Title of Regulation: Qualified residence interest
Heading: Examples
37. Action on Decision 2011-006, 12/21/2011, IRC Sec(s). 165
Gambling losseslimitations on wagering lossesbusiness deductions trade or business of gambling.
Gross estatevaluationalternate valuation dateprivate corps.effect of tax-free reorg.
IRS acquiesced with Tax Courts holding in Mayo, Ronald, (2011), 136 TC 81, that taxpayer engaged in
horse race gambling as trade or business was subject to Code Sec. 165(d);s limitation on losses from
wagering
transactions, limiting such to gains from same.
38. a. Technical Advice Memorandum
b. Service Center Advice
c. Field Service Advice
d. Private Letter Ruling
e. Private Letter Ruling
39. a. Notice
b. Notice 2011-92
c. Imposition of annual fee on branded prescription pharmaceutical manufacturers and importers 2012
fee
year procedure
40. a. Notice 2008-39, 2008-1 CB 684
b. Credit for increasing research activitiescredit or refund procedure for corporate taxpayers.
41. a. 1
b. 2
c. 100

Answers to Research Problems

42. Notice 2012-72, 2012-50 IRB 673 56.5 cents per mile
Textbook Solutions 5

2013 CCH Incorporated. All Rights Reserved. Chapter 2

43. Technical Advice Memorandum 200035005, 9/05/2000. Exchange of FCC radio licenses for FCC
television
license is like kind exchange under Code Sec. 1031.
44. Private Letter Ruling 200118012, 5/07/2001, IRC Sec(s). 4081
Fuel used for racing isnt subject to Code Sec. 4081 gasoline excise tax.
45. Rev. Proc. 2012-1, Sec. 6.01, 2012-1 IRB 1
1. Specific questions and problems
Section 61.Gross Income Defined. Determination as to who is the true owner of property in cases
involving the sale of securities, or participation interests therein, where the purchaser has the contractual
right
to cause the securities, or participation interests therein, to be purchased by either the seller or a third
party.
2. General areas

Any matter in which the determination requested is primarily one of fact, e.g., market value of property,
or
whether an interest in a corporation is to be treated as stock or indebtedness.
3. Areas Under Study In Which Rulings Or Determination Letters Will Not Be Issued Until The Service
Resolves The Issue Through Publication Of A Revenue Ruling, Revenue Procedure, Regulations Or
Otherwise
Section 62(c).Reimbursement Arrangements.Whether amounts related to a salary reduction and paid
under a purported reimbursement or other expense allowance arrangement will be treated as paid under an
accountable plan in accordance with 1.62-2(c)(2).
4. Areas Covered By Automatic Approval Procedures In Which Rulings Will Not Ordinarily Be Issued
Section 338.Certain Stock Purchases Treated as Asset Acquisitions. All requests for an extension of
time under 301.9100-3 within which to make an election under 338(g) or (h)(10) where the Service
has provided an administrative procedure to seek an extension. See Rev. Proc. 2003-33, 2003-1 C.B. 803
(extension automatically granted to certain persons required to file Form 8023 to make a valid section 338
election that have not filed Form 8023 by its due date).
46. Rev. Rul. 2008-5, 2008-3 IRB 271
In situation where taxpayer sells stock at loss and then next day purchases same quantity of identical
stock
for his IRA or Roth IRA, loss is disallowed under Code Sec. 1091; and basis in IRA isnt increased under
Code Sec. 1091(d).
47. Reg. 1.162-27. Certain employee remuneration in excess of $1,000,000.
48. Action on Decision 2004-001, 1/22/2004, IRC Sec(s). 301
In light of changes made to Code Sec. 355; business purpose regs and doubt as to whether Tax Court
would
have reached same holding under similar facts today, IRS partially withdrew its 1968 acquiescence in
Olson, Sidney, 48 TC 855, supplemented by 49 TC 84.
Action on Decision 1968 WL 16461, 06/12/1968
Issued acquiescence for Issues 1 and 2
49. Publication 504Divorced or Separated Individuals
50. Action on Decision 2012-002, 2012-40 IRB, 09/12/2012, IRC Sec(s). 7805
Manufacturers excise taxescredits and refundswritten consent of ultimate purchasers.
Noting that its vitality as precedent has been eroded by numerous court decisions since it was issued 47
years ago, IRS wont acquiesce in Claims Court decision in International Business Machines Corp v.
U.S.,
(1965, Ct Cl) 15 AFTR 2d 1526, 343 F2d 914, that held IRS abused its discretion in applying
retroactively
to taxpayer ruling that computing machines manufactured by taxpayer were subject to manufacturers
excise
tax. In determining whether to apply adverse rulings or revocations of favorable rulings retroactively, IRS
wont follow IBM in determining whether taxpayer is entitled to particular tax treatment because of claim
of
disparity with respect to alleged similarly situated taxpayer, whether or not taxpayers applied for or
received
rulings on their respective positions.