Chapter 16 BANKRUPTCY, DIVORCE, AND TAX FRaud

Tax fraud is claimed by the government while bankruptcy assets are claimed by creditors.

• TRUE

• FALSE

Which is NOT considered one of wilful evasion of tax?

• Deliberate omission of any income from a return

• Making false statement or entry

• Miscalculate the tax relief by accident

• Falsifying books or account

Which of the following is the major reason why there is so much divorce fraud?

• Assets are being taken away from 1 divorce partner and given to another

• Divorce proceedings usually take a long time

• States make divorces very difficult

• Children usually get most assets in divorce cases

Which of the following investigative methods would most likely be used more in divorce cases than in bankruptcy cases?

• Surveillance

• Public records searches

• Subpoena of private records

• Interviews

Which of the following is the least likely symptom of a bust out?

• Company's only listed address is a post office box

• Dramatic increase in size of credit orders

• Public notice of change in management

• Sudden decrease in inventory

Overstating income is a type of tax fraud.

• FALSE

• TRUE

Which of the following is NOT an indicator of a possible bust out?

• An address that is a post office box

• New ownership of a company

• Slow buildup of inventory

• Dramatic increase in the size of credit orders

Bankruptcy courts do not have which of the following responsibilities?

• Appointing trustees, examiners and committees

• Supervising bankruptcy petitions

• Approving reorganization plans

• Conducting hearings and trials to resolve disputes

The person appointed by bankruptcy judge in a chapter 11 proceeding who investigate allegations of fraud or misconduct by the debtor or its principals is EXAMINER.

• FALSE

• TRUE

Which of the following is not a characteristic of an affidavit of proposed investigator?

• Content and extent of detail required does not vary by jurisdiction

• Is prepared when a fraud investigator is retained

• Legal document is sworn under oath and must be notarized

• Addressed to the court and is submitted by an attorney for the person who engaged the investigator