P3-U10 · PART 3 · SOURCE CYCLE 2026-2027
IRS Examination Procedures
How to complete this unit
This unit uses 24 source-gated recall cards and 25 admissible practice questions. Complete the sequence in order; the unreleased wiki prose remains outside the learner path.
- 1 · LearnBuild the rule
Answer each recall prompt before opening it. Then learn the exact rule, test the controlling facts through four quick challenges, explore common questions, and finish with one own-words teach-back.
- 2 · ApplyUse it in context
Complete at least 20 mapped questions over two sessions. Review the explanation even when the answer is correct.
- 3 · ProveTest readiness
Use the Part 3 mock under time pressure. Return here for every flagged or missed concept before the next attempt.
Verified recall questions
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here. Stable unit ownership gathers this lesson across 1 textbook collection.
Q1.A taxpayer in the United States receives a statutory notice of deficiency. How long does the taxpayer generally have from the notice date to petition the Tax Court?
90 days. Publication 556 states the general Tax Court petition period is 90 days, or 150 days when the notice is addressed outside the United States.
Q2.A statutory notice of deficiency is addressed to a taxpayer outside the United States. What petition period does Publication 556 state?
150 days. Publication 556 states a 150-day period when the notice is addressed outside the United States.
Q3.How does current authority treat identification of tax issue(s) with supporting details?
Before responding to an examination, identify the disputed tax issues and assemble facts and records that address them.
Q4.How does current authority treat financial documents and expense records (e.g., cancelled checks or equivalent, bank statements, credit card statements, receipts, brokerage records)?
Canceled checks, statements, receipts, and other contemporaneous financial records can substantiate return entries under examination.
Q5.What should a representative verify about legal documents (e.g., birth certificate, divorce decrees, lawsuit settlements)?
Legal documents are relevant when they establish status, rights, obligations, ownership, or the tax treatment of a transaction.
Q6.State the controlling rule for prior and subsequent tax returns.
Prior and subsequent returns can reveal carryovers, consistency issues, and facts relevant to the year under examination.
Q7.What must an EA remember about other substantive and contemporaneous documentation (e.g., corporate minutes)?
Contemporaneous business records are stronger support than an unsupported reconstruction prepared only after an IRS inquiry.
Q8.Give the practical federal-tax rule for business entity supporting documents (e.g., partnership agreement, corporate bylaws).
Entity agreements, minutes, and governing documents may be needed to establish authority and the substance of business transactions.
Q9.How should a practitioner handle third-party correspondence (e.g., witness communications, employment records)?
Third-party correspondence and records may corroborate facts, but disclosure, summons, privilege, and contact rules still apply.
Q10.What official rule governs requesting an audit reconsideration (e.g., documents and forms)?
Audit reconsideration is an administrative process for reevaluating an assessment when the taxpayer supplies qualifying information.
Q11.How does current authority treat the IRS authority to investigate?
The IRS may examine relevant books, papers, records, and other data to determine the correctness of a return.
Q12.What must an EA remember about the IRS authority to fix time and place of investigation?
The IRS sets a reasonable time and place for an examination under the governing procedural rules.
Q13.Give the practical federal-tax rule for steps in the process (e.g., initial meeting, submission of IRS requested information).
An examination proceeds through notice, issue development and requested information, proposed findings, and the taxpayer's agreement or appeal options.
Q14.What is the key limitation involving interpretation and analysis of revenue agent report (RAR) (e.g., 30-day letter)?
A revenue agent's report and 30-day letter explain proposed changes and the route to request Appeals consideration.
Q15.Shane's tax return was chosen for examination, but he does not want to communicate with the IRS directly. Who may represent Shane in an examination, assuming the proper power of attorney authorization is in place?
All of the above may represent Shane before the IRS examination division.
Q16.Which of the following is NOT an eligible partner in order for a partnership to elect-out of the Centralized Partnership Audit Regime?
Trusts
Q17.Which of the following is a reason that the IRS would reopen a closed audit case?
There was fraud or misrepresentation from the taxpayer during the audit process.
Q18.Which type of IRS examination is conducted entirely by mail?
Correspondence Audit
Q19.Joshua received a notice from the IRS saying a prior year's tax return had been examined, creating a tax assessment of $2,875. Joshua disagrees with the amount of tax assessed. He could request an audit reconsideration in all of the following situations EXCEPT:
The full amount owed has already been paid.
Q20.Hazel trades a large number of stocks every year, although she is just a casual investor. Hazel's 2023 and 2024 tax returns were audited for investment interest expense. Both examinations resulted in no change to the return as filed. Hazel was notified that her 2025 return was selected again for examination for the same type of expenses. What should Hazel do?
Since Hazel has two prior no change audits, she should notify the Internal Revenue Service to see if the examination should be discontinued.
Q21.Gibson is being audited for a prior year, and he wishes to record the audit using an audio device. What must he do in order to record the audit?
Notify the examiner ten days in advance, in writing.
Q22.What is the maximum number of partners a partnership can have to be eligible to elect out of the Centralized Partnership Audit Regime?
100
Q23.Where does an office audit typically take place?
At a nearby IRS field office
Q24.Which of the following is not a term the IRS uses to classify an audit determination?
Acknowledged.
Ready to move on?
- ▸ Explain at least 80% of these 24 rules without opening the answer, twice on different days.
- ▸ Score 80% across 20 or more mapped questions over two sessions, not one memorized round.
- ▸ Complete a timed Part 3 mock and return to this unit if its concepts remain flagged or missed.
Use these checks to choose your next study action. They do not predict a PSI scaled score.