A practitioner is required to inform a client of potential penalties related to a position taken on a tax return. Group of answer choices True False
Added by Kenneth T.
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A tax practitioner has a responsibility to provide accurate and comprehensive advice to their clients regarding tax matters. Show more…
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In 20X2, Carey Hanlon provided tax advice in a letter to Beth Jackson, a tax-only client. For reasons other than the advice given, Jackson engages Riley Urban for tax work in 20X3. Hanlon had not been engaged to assist in the implementation of the actions called for by the advice or to inform Jackson if subsequent tax law changes would adversely affect the advice given. In 20X3, the tax law changes and the advice Hanlon gave in 20X2—if followed again in 20X3 and subsequent years—would increase the amount of taxes Jackson will pay. What must Hanlon do in this scenario? A) Hanlon is not required to inform Jackson about the change in the law. B) Hanlon is required to inform Jackson about the change in the law. C) Hanlon must inform Urban about the tax advice given to Jackson. D) Hanlon must recall the letter to Jackson because the tax law changed.
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Statement on Standards for Tax Services No. 1 establishes as a basic principle of providing tax services that the CPA: a. Must have a good faith belief that the tax return position will be accepted by the IRS. b. Can never recommend a tax position to the client when it is more likely than not to be challenged by the IRS. c. Must have a good faith belief that the tax return position has a realistic possibility of success if challenged by the IRS. d. Can never recommend a tax position to the client without disclosing it to the SEC.
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Deeba is the newest CPA hired on by the IRS Department of Feel Better Surgical Center, LP. Her supervisor has asked her to take an extraordinary position in reporting a transaction on the tax return. Even though Deeba is a recent accounting experience, she feels certain based on some research she has done that the position is unsupported by the Internal Revenue Code, Treasury Regulations, and case law. Deeba must: a. Cave into her boss's demands since her boss has more experience than Deeba. b. Do what her supervisor says since Deeba is being paid only to fill out the tax return, not to use independent judgment. c. Not sign off on a position for which the CPA cannot find proper support. d. Take the extraordinary position since she is protected from liability as she is just obeying orders. Blake and Miranda are in the middle of bitter divorce proceedings. Jeremy, CPA, cares to prepare net worth statements for both individuals and has promised an arbitrator that he will present numbers which Jeremy believes is a fair payment. Jeremy's actions constitute: a. Maximizing client fees. b. A good idea. c. A conflict of interest. d. None of the above. Taylor, CPA, is a supervising CPA in the accounting department of Cheep-a-Lot Wholesale Flooring and Handbag Emporium. She becomes aware that a significant transaction was incorrectly booked to a different account, causing the income statement to appear rosier than it actually is. Taylor has the ability and authority to immediately correct the error but chooses to wait until the following fiscal year since her bonus will be much larger as a result. Taylor has violated which of the following rules: a. The Rule of Ten. b. Matching. c. Conservatism. d. Knowing misrepresentation in the preparation of financial statements or records.
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