1. Which of the following procedures BEST determines whether a bank is in compliance with IRS regulations regarding deposit accounts?
1. Preparation of a computer printout showing TINs for all corporations with average balances in excess of $10,000 a month
2. Analysis of all signature cards to assure that at least two persons are authorized to sign checks, and that their TINs are on the cards
3. Analysis of a bank’s last report on Form 1097C-1, and determination of whether follow-up reports have been filed within 60 days of the date of filing
4. Determination of whether TINs are properly obtained for all new accounts opened

1. Which of the following procedures BEST determines whether a bank is in compliance with IRS regulations regarding deposit accounts?
1. Preparation of a computer printout showing TINs for all corporations with average balances in excess of $10,000 a month
2. Analysis of all signature cards to assure that at least two persons are authorized to sign checks, and that their TINs are on the cards
3. Analysis of a bank’s last report on Form 1097C-1, and determination of whether follow-up reports have been filed within 60 days of the date of filing
4. Determination of whether TINs are properly obtained for all new accounts opened

2.   When conducting an audit of IRS tax compliance procedures, you should select a sample of which of the following forms?

1. 1099A
2. CTR Form 104
3. 17 F-IX-A
4. FFIEC-004

2.  When conducting an audit of IRS tax compliance procedures, you should select a sample of which of the following forms?

1. 1099A
2. CTR Form 104
3. 17 F-IX-A
4. FFIEC-004

3.  Which of the following loans is clearly NOT subject to the IRS mortgage interest reporting requirement?

1. A loan made to purchase securities, secured by rural acreage
2. A loan made to finance a college education, secured by a piece of commercial real estate
3. A loan made to purchase a lot on a lake, secured by a certificate of deposit
4. A loan made to purchase a residence, secured by the dwelling

3.  Which of the following loans is clearly NOT subject to the IRS mortgage interest reporting requirement?

1. A loan made to purchase securities, secured by rural acreage
2. A loan made to finance a college education, secured by a piece of commercial real estate
3. A loan made to purchase a lot on a lake, secured by a certificate of deposit
4. A loan made to purchase a residence, secured by the dwelling

4.  Information reports must include which of the following details?

1. Name, address, and TIN of the borrower
2. Purpose of the loan
3. Address of the property securing the mortgage
4. Fair market value of the property at the time of the loan

4.  Information reports must include which of the following details?

1. Name, address, and TIN of the borrower
2. Purpose of the loan
3. Address of the property securing the mortgage
4. Fair market value of the property at the time of the loan

5.  First National Bank sold several of its mortgage loans to individual investors and now services the loans for the individuals. First National Bank collects more than $600 on most of these mortgages and deposits the money into the account of the investors. At the end of each year, First National Bank sends the investors a summary of transactions on the mortgages and a detailed breakdown of the principal and interest payments made. Who is responsible for filing the mortgage interest information returns?

1. The investors, because they own the loans and the money is collected for them
2. The investors, because they have the necessary information from the servicer
3. First National Bank, because it was the first owner of the loans
4. First National Bank, because it collects the interest and has the information necessary to file the information return

5.  First National Bank sold several of its mortgage loans to individual investors and now services the loans for the individuals. First National Bank collects more than $600 on most of these mortgages and deposits the money into the account of the investors. At the end of each year, First National Bank sends the investors a summary of transactions on the mortgages and a detailed breakdown of the principal and interest payments made. Who is responsible for filing the mortgage interest information returns?

1. The investors, because they own the loans and the money is collected for them
2. The investors, because they have the necessary information from the servicer
3. First National Bank, because it was the first owner of the loans
4. First National Bank, because it collects the interest and has the information necessary to file the information return

6.  First National Bank does not have the TINs of several borrowers with mortgage loans. What should the bank do to fulfill the mortgage interest reporting regulations?

1. Mail a one-time request for TINs by certified mail to each borrower who has failed to provide one
2. Post a notice in its mortgage lending lobby that TINs are required for mortgage loans
3. Mail a separate request for TINs annually to borrowers who have failed to provide one
4. Include a request for TINs in the annual mailing of the payment coupon book

6.  First National Bank does not have the TINs of several borrowers with mortgage loans. What should the bank do to fulfill the mortgage interest reporting regulations?

1. Mail a one-time request for TINs by certified mail to each borrower who has failed to provide one
2. Post a notice in its mortgage lending lobby that TINs are required for mortgage loans
3. Mail a separate request for TINs annually to borrowers who have failed to provide one
4. Include a request for TINs in the annual mailing of the payment coupon book

7.  On foreclosure, which of the following loans is subject to the reporting requirements for foreclosed and abandoned property?

1.  A loan made to purchase a family car, secured by the car
2. An unsecured loan made to purchase a computer used in the borrower’s business
3. A loan made to purchase a residence, secured by the residence
4. A loan made to purchase a home computer, secured by the computer

7.  On foreclosure, which of the following loans is subject to the reporting requirements for foreclosed and abandoned property?

1.  A loan made to purchase a family car, secured by the car
2. An unsecured loan made to purchase a computer used in the borrower’s business
3. A loan made to purchase a residence, secured by the residence
4. A loan made to purchase a home computer, secured by the computer

8.  First National Bank has foreclosed on several loans. One of the loans is not subject to the requirement to submit an information return on the foreclosed property. Which loan is most likely NOT covered by the regulations?

1. A loan to Brown & Associates, a local law firm, to purchase furniture, secured by the furniture
2. A loan to Mrs. Lynch to purchase stereo equipment for her in her office waiting room
3. A loan to Dr. Stevens to purchase kitchen appliances
4. A loan to Mr. and Mrs. Sanders to purchase a computer for their antique shop

8.  First National Bank has foreclosed on several loans. One of the loans is not subject to the requirement to submit an information return on the foreclosed property. Which loan is most likely NOT covered by the regulations?

1. A loan to Brown & Associates, a local law firm, to purchase furniture, secured by the furniture
2. A loan to Mrs. Lynch to purchase stereo equipment for her in her office waiting room
3. A loan to Dr. Stevens to purchase kitchen appliances
4. A loan to Mr. and Mrs. Sanders to purchase a computer for their antique shop

9.  First National Bank made a loan to Lawrence & Co. for the purpose of purchasing landscape equipment, secured by a storage lot the company owned. The borrower made payments for a year and then defaulted. Three months passed without any communication or payments from the borrower, despite the bank’s efforts to locate the company’s owners. The company appears to have ceased operations. What is the bank’s BEST course of action?

1. None, because the bank has no actual knowledge of abandonment and has not foreclosed on the property
2. Make reasonable inquiries to determine whether the property is abandoned and if so, report it as abandoned
3. Locate the borrower, foreclose on the property, and report the transaction as a foreclosure
4. Report the property as abandoned

9.  First National Bank made a loan to Lawrence & Co. for the purpose of purchasing landscape equipment, secured by a storage lot the company owned. The borrower made payments for a year and then defaulted. Three months passed without any communication or payments from the borrower, despite the bank’s efforts to locate the company’s owners. The company appears to have ceased operations. What is the bank’s BEST course of action?

1. None, because the bank has no actual knowledge of abandonment and has not foreclosed on the property
2. Make reasonable inquiries to determine whether the property is abandoned and if so, report it as abandoned
3. Locate the borrower, foreclose on the property, and report the transaction as a foreclosure
4. Report the property as abandoned

10.  By what date must the bank send the borrower a statement in connection with an information return on foreclosed or abandoned property?

1. January 15 of the year following the year of the foreclosure or abandonment
2. January 31 of the year following the year of the foreclosure or abandonment
3. February 28 of the year following the year of the foreclosure or abandonment
4. March 1 of the year following the year of the foreclosure or abandonment

10.  By what date must the bank send the borrower a statement in connection with an information return on foreclosed or abandoned property?

1. January 15 of the year following the year of the foreclosure or abandonment
2. January 31 of the year following the year of the foreclosure or abandonment
3. February 28 of the year following the year of the foreclosure or abandonment
4. March 1 of the year following the year of the foreclosure or abandonment