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Solution Manual Federal Tax Research 13th Edition Sawyers, Gill
Solution Manual Federal Tax Research 13th Edition Sawyers, Gill Solution Manual Federal Tax Research 13th Edition Sawyers, Gill
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FEDERAL TAX RESEARCH 13TH EDITION [DATE]Solution Manual Federal Tax
Research 13th Edition
Sawyers, Gill
, CHAPTER 1
AN INTRODUCTION TO TAX PRACTICE AND ETHICS
DISCUSSION QUESTIONS
1-1. In The United States, The Tax System Is An Outgrowth Of The Following Five Disciplines:
Law, Accounting, Economics, Political Science, And Sociology. The Environment For The
Tax System IsProvided By The Principles Of Economics, Sociology, And Political Science,
While The Legal And Accounting Fields Are Responsible For The System's Interpretation
And Application.
Each Of These Disciplines Affects This Country's Tax System In A Unique Way. Economists
AddressSuch Issues As How Proposed Tax Legislation Will Affect The Rate Of Inflation Or
Economic Growth.Measurement Of The Social Equity Of A Tax, And Determining Whether A
Tax System Discriminates Against Certain Taxpayers, Are Issues That Are Examined By
Sociologists And Political Scientists. Finally, Attorneys Are Responsible For The Interpretation
Of The Taxation Statutes, And Accountants Ensure That These Same Statutes Are Applied
Consistently.
Page 4
1-2. The Other Major Categories Of Tax Practice In Addition To Tax Research Are:
• Tax Compliance
• Tax Planning
• Tax
LitigationPage 5
1-3. Tax Compliance Consists Of Gathering Pertinent Information, Evaluating And Classifying That
Information, And Filing Any Necessary Tax Returns. Compliance Also Includes Other Functions
Necessary To Satisfy Governmental Requirements, Such As Representing A Client During An
IRS Audit.
Page 5
1-4. Most Of The Tax Compliance Work Is Performed By Commercial Tax Preparers, Enrolled
Agents, Attorneys, And Cpas. Noncomplex Individual, Partnership, And Corporate Tax
Returns Often Are Completed By Commercial Tax Preparers. The Preparation Of More
Complex Returns Usually Is Performed By Enrolled Agents, Attorneys, And Cpas. The Latter
Groups Also Provide Tax Planning Services And Represent Their Clients Before The IRS.
An Enrolled Agent Is One Who Is Admitted To Practice Before The IRS By Passing A Special
IRS- Administered Examination, Or Who Has Worked For The IRS For Five Years, And Is
Issued A Permit ToRepresent Clients Before The IRS. Cpas And Attorneys Are Not Required To
Take This Examination AndAre Automatically Admitted To Practice Before The IRS If They Are
In Good Standing With The Appropriate Professional Licensing Board.
Page 5 And Circular 230
,Page 1-2 SOLUTIONS MANUAL
1-5. Tax Planning Is The Process Of Arranging One's Financial Affairs To Minimize Any Tax
Liability. MuchOf Modern Tax Practice Centers Around This Process, And The Resulting
Outcome Is Tax Avoidance.
There Is Nothing Illegal Or Immoral In The Avoidance Of Taxation, As Long As The Taxpayer
Remains Within Legal Bounds. In Contrast, Tax Evasion Constitutes The Illegal Nonpayment Of
A Tax And CannotBe Condoned. Activities Of This Sort Clearly Violate Existing Legal
Constraints And Fall Outside Of The Domain Of The Professional Tax Practitioner.
Page 6
1-6. In An Open Tax Planning Situation, The Transaction Is Not Yet Complete, Therefore, The Tax
PractitionerMaintains Some Degree Of Control Over The Potential Tax Liability, And The
Transaction May Be Modi-Fied To Achieve A More Favorable Tax Treatment. In A Closed
Transaction However, All Of The Pertinent Actions Have Been Completed, And Tax Planning
Activities May Be Limited To The Presentation Of The Situation To The Government In The
Most Legally Advantageous Manner Possible.
Page 6
1-7. Tax Litigation Is The Process Of Settling A Dispute With The IRS In A Court Of Law.
Typically, A TaxAttorney Handles Tax Litigation That Progresses Beyond The Final IRS
Appeal.
Page 6
1-8. Cpas Serve Is A Support Capacity In Tax Litigation.
Page 6
1-9. Tax Research Consists Of The Resolution Of Unanswered Taxation Questions. The Tax Research
ProcessIncludes The Following:
1. Identification Of Pertinent Issues;
2. Specification Of Proper Authorities;
3. Evaluation Of The Propriety Of Authorities; And,
4. Application Of Authorities To A Specific Situation.
Page 6
1-10. Circular 230 Is Issued By The Treasury Department And Applies To All Who Practice Before
The IRS.Page 7
1-11. In Addition To Circular 230, Cpas Must Follow The AICPA's Code Of Professional Conduct
And Statements On Standards For Tax Services. Cpas Must Also Abide By The Rules Of The
AppropriateState Board(S) Of Accountancy.
Page 7
1-12. A Return Preparer Must Obtain 18 Hours Of Continuing Education From An IRS-Approved CE
Provider. The Hours Must Include A 6 Credit Hour Annual Federal Tax Refresher Course
(AFTR) That Covers Filing Season Issues And Tax Law Updates. The AFTR Course Must
Include A Knowledge-Based Comprehension Test Administered At The Conclusion Of The
Course By The CE Provider.
Limited Practice Rights Allow Individuals To Represent Clients Whose Returns They
Prepared AndSigned, But Only Before Revenue Agents, Customer Service Representatives,
And Similar IRS Employees.
, Page 10 And IRS.Gov
1-13. False. Only Communication With The IRS Concerning A Taxpayer's Rights, Privileges, Or
Liability IsIncluded. Practice Before The IRS Does Not Include Representation Before The Tax
Court.
Page 7
1-14. Section 10.2 Of Subpart A Of Circular 230 Defines Practice Before The IRS As Including:
Matters Connected With Presentation To The Internal Revenue Service Or Any Of Its
OfficersOr Employees Relating To A Client's Rights, Privileges, Or Liabilities Under
Laws Or Regulations Administered By The Internal Revenue Service. Such
Presentations Include ThePreparation And Filing Of Necessary Documents,
Correspondence With, And Communications To The Internal Revenue Service, And The
Representation Of A Client At Conferences, Hearings, And Meetings.
Page 7
1-15. To Become An Enrolled Agent An Individual Can (1) Pass A Test Given By The IRS Or (2)
Work ForThe IRS For Five Years. Circular 230, Subpart A, Secs. 10.4 To 10.6.
Page 9
1-16. Enrolled Agents Must Complete 72 Hours Of Continuing Education Every Three Years (An
Average Of24 Per Year, With A Minimum Of 16 Hours During Any Year.). Circular 230, Subpart
A. §10.6.
Page 9
1-17. True. As A General Rule, An Individual Must Be An Enrolled Agent, Attorney, Or CPA To
Represent AClient Before The IRS. There Are Limited Situations Where Others May Represent
A Taxpayer; However, This Fact Pattern Is Not One Of Them. Since Leigh Did Not Sign The
Return, She Cannot Represent The Taxpayer, Only Rose Can.
Pages 10-11
1-18. The Names Of Organizations That Can Be Represented By Regular Full-Time Employees Are
Found In Circular 230, §10.7(C). A Regular Full-Time Employee Can Represent The Employer
(Individual Employer). A Regular Full-Time Employee Of A Partnership May Represent The
Partnership. Also, A Regular Full-Time Employee Of A Trust, Receivership, Guardianship, Or
Estate May Represent The Trust, Receivership, Guardianship, Or Estate. Furthermore, A Regular
Full-Time Employee Of A Governmental Unit, Agency, Or Authority May Represent The
Governmental Unit, Agency, Or Authority In The Course Of His Or Her Official Duties.
Page 10
1-19. Yes. Circular 230, Subpart A, Sec. 10.7.
Page 10
1-20. True. A Practitioner May Be Suspended Or Disbarred From Practice Before The IRS If He
Page 12
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