A former longstanding client of an accounting practice is being investigated by the tax authorities. The former client requests the assi the practice in representing them. The client promises that, if the outcome is favourable, he will pay a substantial fee and re-appoint t practice as his accountants in the future. (Any tax payable will be deducted from the fee.)

A former longstanding client of an accounting practice is being investigated by the tax authorities. The former client requests the assi the practice in representing them. The client promises that, if the outcome is favourable, he will pay a substantial fee and re-appoint t practice as his accountants in the future. (Any tax payable will be deducted from the fee.)

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter12: Tax Administration And Tax Planning

Section: Chapter Questions

Problem 11MCQ

See similar textbooks

Similar questions

When a CPA knows that a tax client has skimmed cash receipts and not reported the incomein the federal income tax return but signs the return as a CPA who prepared the return, theCPA has violated which of the following AICPA rules of conduct?a. The Confidential Client Information Rule.b. The Integrity and Objectivity Rule.c. The Independence Rule.d. The Accounting Principles Rule
According to the AICPA's Statements on Standards for Tax Services, what duties does the tax practitioner owe the client? (If an input field is not used leave the input field(s) empty.) not to disclose tax-related errors without the client's consent. to inform the client of corrective measures to be taken. C to inform the client of errors in a previously filed tax return. to inform the client of how the client can avoid a penalty through disclosure. to inform the client of the potential adverse consequences of a tax return position. to inquire of the client when information provided by him or her appears incorrect, incomplete, or inconsistent on its face. to inquire of the client when the client must satisfy conditions to take a deduction. to instruct the client to file an extension based on refunds that are expected. to instruct the client whether or not to file a tax return.
N4 When discussing types of business entities during a client interview, a tax preparer should: A)Not discuss different types of entities since this might imply the client has made the wrong choice. B)Recommend to the client their best choice for business entity after a thorough interview. C)Present the facts, but not recommend a particular type of entity. D)Always recommend choosing a sole proprietorship since this will minimize the client's tax preparation fees.
alculator Which of the following is not a preparer penalty? a.Tax preparers may be assessed a penalty for endorsing or cashing a refund check issued to a taxpayer. b.Tax preparers may be assessed a penalty for failing to give the taxpayer the preparer's workpapers. c.Tax preparers may be assessed a penalty for failing to keep a copy of the prepared return. d.Tax preparers may be assessed a penalty for failing to sign a tax return.
You are assisting a client with a transaction that produces a most favorable tax result. The client told you the outcome is dependent on one court case. What should you do? a. Nothing. Your due diligence obligations allow you to rely in good faith on information furnished to you by the client; you are permitted to rely on the client's judgment. 6. Check with the client's auditor to ensure the numbers are valid; then you can recalculate intended tax benefits. c. Help the client by getting a head start on the tax return presentation of the transaction; the better the presentation, the less likely it will be audited by the IRS. d. Analyze the case to make sure the holding has not been reversed, the client's facts are similar to those described in the case, and the law cited in the case is still valid.
According to the PCAOB, which of the following tax services would impair independence? A. Tax consulting B. Providing a tax opinion where the opinion is not considered an aggressive position or listed transaction by the IRS C. Tax returns prepared by BDO Spain for the controller's dependent children living in Spain while attending school abroad D. Tax consulting for the CFO of an IPO candidate completed before the start of the professional engagement period for the audit of the financial statements to be included in the IPO registration
For each of the following situations, indicate the amount of the penalty that could be imposed on the tax return preparer A tax return preparer understates the taxpayer’s tax liability with a frivolous position and does not disclose the position. $ A tax return preparer fails to furnish his identifying number $ A tax return preparer aids a taxpayer in understating a tax liability $ A tax return preparer endorses and cashes a client’s tax refund check.
Distinguish between tax avoidance and tax evasion. What are the ethical responsibilities of the tax practitioner in dealing with tax avoidance? What are the ethical responsibilities of the tax practitioner in dealing with tax evasion?
remedy in recovering the overwithholding? a. Claim the overwithholding as tax credit for the year b. File for a tax refund with BIR c. File for a civil suit against the erring client d. Collect the overwithheld amount from the client
For each of the following situations, indicate the amount of the penalty that could be imposed on the tax return preparer: a. A tax return preparer understates the taxpayer's tax liability with a frivolous position and does not disclose the position. The greater of $ percent of the income derived by the tax preparer for an undisclosed unrealistic position. or b. A tax return preparer fails to furnish his identifying number. c. A tax return preparer aids a taxpayer (an individual) in understating a tax liability. d. A tax return preparer endorses and cashes a client's tax refund check.
What is the goal of a tax audit? A. To make sure you paying your imposed fines B. To make sure you are paying your taxes C. To investigate criminal activity D. Non
A CPA – (a) may use a client’s estimate of dollar amounts in preparing a tax return only if the client provides a sworn affidavit stating that supporting documents are lost. (b) generally may use a client’s estimated amounts in preparing a tax return sub-ject to determining that the amounts are reasonable based on all known facts. (c) may use her / his own estimate of some dollar amount if the client’s estimate is deemed to be either inadequate or excessive. (d) may never under any circumstances put an estimated amount on a client’s tax return and in fact would risk (i) losing her / his state CPA license and/or (ii) criminal sanctions imposed by the IRS for doing so.