CHAPTER 7 – Questions and Answers

Students - Here are 14 questions to test what you have learned!

Press the buttons on the left to check your answers.

If you answer correctly, I will tell you “Affirmative”.

If you answer incorrectly, I will tell you “Negative”.

IT IS TIME TOPROCEED TO THE FIRST QUESTION

Question 1 - When you “terminate collection action” on a debt you are:

A.A. stopping stopping allall collection action on the debt. collection action on the debt.

B.B. ceasing ceasing active collectionactive collection on the debt. on the debt.

C.C. writing-off the debt.writing-off the debt.

Question 2 - Temporarily ceasing active collection on a debt is called:

A.A. being lazy.being lazy.

B.B. currently-not-collectible.currently-not-collectible.

C.C. suspension.suspension.

Question 3 - All of the following are legitimate reasons for terminating collection action except:

A.A. The debtor is discharged in The debtor is discharged in bankruptcy.bankruptcy.

B.B. You cannot locate the debtor.You cannot locate the debtor.

C.C. Your boss tells you to finish action on Your boss tells you to finish action on the the debt before you go on vacation.debt before you go on vacation.

D.D. The debtor does not have the ability to The debtor does not have the ability to pay pay any portion of the debt.any portion of the debt.

Question 4 - The term write-off refers to:

A.A. A decision by Santa Clause that a child should not A decision by Santa Clause that a child should not receive a present for the upcoming Christmas.receive a present for the upcoming Christmas.

B.B. A determination that a debtor does not have to A determination that a debtor does not have to pay a pay a debt that is owed.debt that is owed.

C.C. A determination that a debt has no value for A determination that a debt has no value for accounting purposes and an agency’s action to accounting purposes and an agency’s action to reflect this reflect this determination in the agency’s determination in the agency’s accountingaccounting reports.reports.

Question 5 - You may only write-off a debt after the debt has been terminated:

A.A. TrueTrue

B.B. FalseFalse

C.C. True and FalseTrue and False

Question 6 - According to OMB Circular No. A-129, how many classifications of write-off are there?

A. TwoA. Two

B. ThreeB. Three

C. This is a trick question - there is no C. This is a trick question - there is no such thing as OMB.such thing as OMB.

Question 7 - The two classifications of write-off are called:

A. Termination and currently-not-collectible.A. Termination and currently-not-collectible.

B. Jack and Jill.B. Jack and Jill.

C. Currently-not-collectible and close-out.C. Currently-not-collectible and close-out.

Question 8 - A debt is classified as “close-out”...

A. Before it is terminated.A. Before it is terminated.

B. When it is determined that the agency does not B. When it is determined that the agency does not intend to take any further action to collect the intend to take any further action to collect the debt.debt.

C. When it is determined that a debt is ineligible C. When it is determined that a debt is ineligible for the Treasury Offset Program.for the Treasury Offset Program.

Question 9 - A 1099-C is...

A. A. A form filed with the Internal Revenue A form filed with the Internal Revenue Service used to report potential income of a Service used to report potential income of a debtor whose debt has been closed-out.debtor whose debt has been closed-out.

B.B. A Federal Claims Collection Standards A Federal Claims Collection Standards section dealing with termination of section dealing with termination of indebtedness.indebtedness.

C.C. A new jumbo aircraft created by Boeing A new jumbo aircraft created by Boeing that can hold up to 1099 passengers.that can hold up to 1099 passengers.

Question 10 - The dollar threshold for mandatory 1099-C reporting is:

A. $1.37A. $1.37

B. $500B. $500

C. $600C. $600

Question 11 - What is an “identifiable event”?

A. A lineup at a police station where a witness to a A. A lineup at a police station where a witness to a crime identifies a suspect.crime identifies a suspect.

B. An event that triggers the requirement to report B. An event that triggers the requirement to report a discharge of indebtedness to IRS as potential a discharge of indebtedness to IRS as potential income.income.

C. A verifiable UFO siting. C. A verifiable UFO siting.

Question 12 - How many identifiable events are there under IRS regulations?

A. 6A. 6

B. 8B. 8

C. Its not the quantity that C. Its not the quantity that matters, matters, but the quality.but the quality.

Question 13 - Which answer has each of the terms on the left matched to the appropriate source document on the right.

A.A. Active collectionActive collection --- Federal Claims Collection StandardsDischarge of IndebtednessDischarge of Indebtedness --- Internal Revenue CodeCurrently-not-collectibleCurrently-not-collectible --- OMB Circular No. A-129

B. B. Active collectionActive collection --- OMB Circular No. A-129Discharge of IndebtednessDischarge of Indebtedness --- Internal Revenue CodeCurrently-not-collectibleCurrently-not-collectible --- Federal Claims Collection

Standards C. C. Active collectionActive collection --- The Bone Collector

Discharge of IndebtednessDischarge of Indebtedness --- A River Runs Through It Currently-not-collectibleCurrently-not-collectible --- The Merchant of Venice

Question 14 - If a debtor files for Chapter 11 bankruptcy protection, the agency should:

A. Close-out the A. Close-out the debt and issue a debt and issue a 1099-C.1099-C.

B. Terminate B. Terminate collection action on collection action on the debt.the debt.

C. Write-off the C. Write-off the debt.debt.

D. Suspend D. Suspend collection action collection action until the bankruptcy until the bankruptcy case is dismissed.case is dismissed.

YOU HAVE FINISHED MY TUTORIAL.

YOU ARE A GOOD STUDENT AND DID WELL.

“HASTA LA VISTA, BABY!”