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Solution Manual For Federal Tax Research Author: Roby Sawyers , Steven Gill || 13th Edition
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Solution Manual For Federal Tax Research Author: Roby Sawyers , Steven Gill || 13th Edition
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Federal Tax Research, 12th 13th Edition Page 1-1Solution Manual For
Federal Tax Research
Author: by Roby Sawyers , Steven Gill
13th Edition
,Page 1-2 SOLUTIONS MANUAL
Chapter 1
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
Is Provided 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
Address Such 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 As Follows:
• Tax Compliance
• Tax Planning
• Tax Litigation
Page 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
Internal Revenue Service (Irs) Audit.
,Federal Tax Research, 12th 13th Edition Page 1-3
Page 5
1-4. Most Of The Tax Compliance Work Is Performed By Commercial Tax Preparers, Enrolled Agents
(Eas), Attorneys, And Certified Public Accountants (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 Eas, Attorneys, And Cpas. The Latter Groups
Also Provide Tax Planning Services And Represent Their Clients Before The Irs.
An Ea 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 To
Represent Clients Before The Irs. Cpas And Attorneys Are Not Required To Take This
Examination And Are Automatically Admitted To Practice Before The Irs If They Are In Good
Standing With The Appropriate Professional Licensing Board.
Page 5 And Circular 230
1-5. Tax Planning Is The Process Of Arranging One’s Financial Affairs To Minimize Any Tax
Liability. Much Of 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 Cannot Be 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
Practitioner Maintains Some Degree Of Control Over The Potential Tax Liability, And The
Transaction May Be Modified 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 1-4 SOLUTIONS MANUAL
Page 6
1-7. Tax Litigation Is The Process Of Settling A Dispute With The Irs In A Court Of Law. Typically,
A Tax Attorney 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
Process Includes 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
Appropriate State 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
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