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Research Case Solutions For Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill.
Research Case Solutions For Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill.
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Federal Tax Research, 12th Edition Page 1 Research Case Solutions The solutions to the research cases are valid as of February 2020 . It is likely that there will be changes in the code, regulations, administrative pronouncements, and case law after this manual is published. Further, it is likely that the services available to the students will not be identical to those available to the authors of this manual. All possible citations are not provided; only a sample of the citations most likely provided by students is presented. Consequently, the st udents ‘ responses may vary from those listed for each question. Chapter 1 Note: For the following cases, students may present other positions , which could be considered ethically correct. The answers presented below are the views of the authors and are p resented as a basis to judge a student ‘s ethical conclusion : 1-1 AICPA Code of Professional Conduct ET § 1.200.001 : Independence ET § 1.100.001 : Objectivity and Integrity ET § 1.700.001 : Confidential Client Information ET § 1.400.001 : Acts Discreditable SSTS No. 1: Tax Return Positions It is not advisable for Ahi Corporation to complete the transaction. Under ET § 1.100.001 , all professional services by a CPA should be rendered with objectivity and integrity, avoiding any potential or existing conflicts of interest. The CPA must exercise due professional care in the performance of all professional services and comply with al l standards promulgated by the bodies designated by the AICPA Council. Under ET §1.400.001 , a CPA must not commit an act that is discreditable to the profession. Under the Statements of Standards for Tax NURSEDOCS Federal Tax Research, 12th Edition Page 2 Services (SSTS), a CPA should have a good -faith beli ef that a recommended position has a real istic possibility of being sustained if challenged. The CPA must use judgment that reflects professional competence and serves the client ‘s needs. Written communication should be given to the client in important, unusual, or complicated transactions. The CPA should advise the client of such risks as in the instant case. Where the taxpayer insists on the specific position, the CPA should not continue with the engagement as the tax return position is exploitative an d frivolous. 1-2. AICPA Code of Professional Conduct ET § 1.100.001 : Objectivity and Integrity SSTS No. 1: Tax Return Positions; No. 6: Knowledge of Error: Return Preparation and Administrative Proceedings A CPA must comply with all standards promulgat ed by bodies designated by the AICPA Council and conform to generally accepted accounting principles. Under ET § 1.100.001 , all professional services by a CPA should be rendered with objectivity and integrity, avoiding any potential or existing conflicts of interest. In addition, a CPA should neither knowingly misrepresent facts nor subordinate his or her judgment to that of others in rendering any professional services. Under the Statements of Standards for Tax Services (SSTS), a CPA should have a good -faith belief that a recommended position has a realistic possibility of being sustained if challenged. In the instant case, the CPA must notify and advise the client promptly upon his or her knowledge of a prior or current tax return error(s) that has a sig nificant effect upon the taxpayer ‘s liability. The client must be notified and advised either orally or in writing. Once rental prices of the current area have been verified and compared against the amount paid by Haddock Corp oration , the CPA should take t he appropriate actions. The CPA should NURSEDOCS Federal Tax Research, 12th Edition Page 3 consider whether to proceed with the preparation of the current year ‘s return or resign from the engagement completely. He or she should not sign the tax return until the appropriate measures have been taken to correc t the errors made in the current and prior returns. 1-3. AICPA Code of Professional Conduct ET § 1.100.001 : Objectivity and Integrity ET § 1.700.001 : Confidential Client Information Under ET § 1.700.001 of the AICPA Code of Professional Conduct, a CPA in the practice of public accounting must not disclose confidential client data without specific consent of the client. There are exceptions that exist for Rule 301. Under ET § 1.100.001 , all professional s ervices by a CPA should be rendered with objectivity and integrity, avoiding any potential or existing conflicts of interest. In addition, a CPA should neither knowingly misrepresent facts nor subordinate his or her judgment to that of others in rendering any professional services. In the instant case, the CPA should notify the client, Shark Corporation, of the misrepresentation of facts. If the client is not willing to notify the buyer of the building ‘s current structural condition, the CPA should resign from the engagement. If the CPA has already told the other side that the building was OK when he or she learns of its status, the CPA should resign from the engagement with Shark Corporation. 1-4. AICPA Code of Professional Conduct ET § 1.100.001 : Object ivity and Integrity ET § 1.300.001 General Standards ET § 1.700.001 : Confidential Client Information Under ET § 1.700.001 of the AICPA Code of Professional Conduct, a CPA in the practice of public accounting must not disclose confiden tial client data without NURSEDOCS Federal Tax Research, 12th Edition Page 4 specific consent of the client. There are exceptions that exist for ET § 1.700.001 . In the instant case, if and only if Anchovy gives permission to Tom can Anchovy ‘s financial condition be disclosed to Sardine Corporation, Alice ‘s client. 1-5. AICPA Code of Professional Conduct ET § 1.200.001 : Independence ET § 1.100.001 : Objectivity and Integrity As the tax manager, it is not advisable for you to go on the fishing trip with the audit manager, all expenses paid by Snapper. Under ET § 1.200.001 of the AICPA Code of Professional Conduct, a CPA in public practice must be independent of the enterprise for which professional services are being rendered. As in the instant case, independence is impaired if a CPA (or CPA firm) has any direct or material indirect financial interest in the client ‘s enterprise, since Snapper could be a major client for the CPA firm. Under ET § 1.100.001 , all professional services by a CPA should be rendered with both the utmost objectivity and integrity, avoid ing any conflict of interest. ET § 1.100.001 prohibits a CPA firm from being requested to follow blindly the demands of an audit client or to subordinate his or her judgment to that of others in rendering any professional services. It would be in good faith to notify the CPA firm of the audit manager ‘s failure to comply with the rules under the AICPA Code of Professional Conduct. Notifying the CPA firm could require a moral decision to inform on a fellow staff member. It is in the best interest of the CPA firm to abide by all rules and regulations or risk severe consequences. 1-6. a. There should be a variety of student recommendations on what Darlene should do in this situation. The recommendations could range from eat the time to quit the firm. NURSEDOCSThe benefits of buying summaries with Stuvia:
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