Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 2, Problem 9DQ
To determine
Prepare a memo for the tax files and outlining the conversation with Person S.
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You are a CPA and do tax returns for individuals. A woman enters your office and asks you to complete her tax return. During your meeting, she mentions that she is expecting about $5000 in refund, and needs that to pay off a debt, that will result in a $1000 fine if she does not pay in the next month. You complete her tax return, but the refund is much lower than she expected, only $1000. She is very mad, and consults with another CPA. The other CPA determines that you made a significant mistake, but the period to file returns has passed. It will cost $500 to file an amendment. What damages is the woman likely entitled to?
Group of answer choices
A. None, because accountants can't be perfect
B. $500, because that is all that is needed to make it right
C. $500, and potentially $1000, because of the consequential damages of not being able to pay off her loan on time
D. $4000, because that is the difference between the proper refund and your mistake.
Cheepie Freund is a dear friend of yours, and of course she knows you are a tax accountant working for a large local accounting firm. April 15 ^ (th) is soon approaching, and you and Cheepie just happen to be sharing some friendly gossip when she asks you to consider preparing her tax return. You are more than happy to help out your friend and schedule an appointment to do her return in a couple of days. You meet later in the week, and you complete her return while at home. She has a somewhat complicated tax return, and you decide to charge her $250 for the work. She is very happy with both the return and your work and pays you in cash. Find three ethical dilemmas and explain your reasoning.
A retired 67-year-old, low-income client makes an appointment with you, a tax professional, to have a tax return prepared. Once you review their documents, you realize this is a simple return. The firm charges a minimum of $500 per tax return prepared, which is a significant amount of money for the taxpayer. Create one initial post and respond to at least two of your classmates.
For your initial post, address the following:
What might you do to help a retired 67-year-old, low-income client with a simple return?
What options are available to low-income taxpayers?
Why would a retired 67-year-old, low-income client be eligible for one of these options— VITA or TCE—over another?
What specific income and tax papers would this client need for eligibility in either program?
Chapter 2 Solutions
Individual Income Taxes
Ch. 2 - A large part of tax research consists of...Ch. 2 - Why do taxpayers often have more than one...Ch. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQCh. 2 - Rank the following items from the lowest to...Ch. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQ
Ch. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Sanjay receives a 90-day letter after his...Ch. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - Prob. 16DQCh. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - Prob. 19DQCh. 2 - Prob. 20DQCh. 2 - Prob. 21DQCh. 2 - Prob. 22DQCh. 2 - Prob. 23DQCh. 2 - Prob. 24DQCh. 2 - Prob. 25DQCh. 2 - Prob. 26DQCh. 2 - Prob. 27DQCh. 2 - Prob. 28DQCh. 2 - Prob. 29DQCh. 2 - Prob. 30DQCh. 2 - Prob. 31DQCh. 2 - For her tax class, Yvonne must prepare a research...Ch. 2 - Prob. 33DQCh. 2 - Prob. 34DQCh. 2 - Prob. 35DQCh. 2 - Prob. 36DQCh. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Using the legend provided, classify each of the...Ch. 2 - Prob. 43PCh. 2 - Prob. 1RPCh. 2 - Prob. 2RPCh. 2 - When Oprah gave away Pontiac G6 sedans to her TV...Ch. 2 - Prob. 4RPCh. 2 - (1) Go to taxalmanac.org, and use the website to...
Knowledge Booster
Similar questions
- Access the Internet and go to www.irs.gov and select News in the upper right hand corner (on mobile devices, select Menu in the upper right hand corner and select News). Select IRS Guidance(on mobile devices, hit the plus on more News, then scroll down until you see IRS Guidance) and then select IRS Guidance in Plain English.Which of the following is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer's specific set of facts? Private letter ruling Revenue ruling Revenue procedure Notice Regulationarrow_forward1. Bonnie receives salary income of $32,000, unemployment compensation of $4,400, and interest income of $1,200 and a gift of $7,000 in cash from her aunt. How much gross income does Bonnie have?In your response, please make sure to take all of the facts above into consideration. You can refer back to the text, lecture videos, and the IRS website. Please make sure to support whatever conclusion you decide to present.2. This next question will be more opinion-based. The United States operates utilizes a progressive tax system. What exactly does this mean? Do you believe it is the best system for the United States or this is there a better answer (one additional choice could be a flat tax for example)? Please try to explain your thoughts as thoroughly as possible.Your initial post will be due Wednesday February 3, 2021 with follow up posts to at least two classmates due Sunday February 31, 2021arrow_forwardA CPA prepares tax returns for clients and bills them after the work is completed. It usually takes two weeks of work to prepare the tax returns. It takes 30 days on average to receive payment from the clients. The CPA uses cash-basis accounting. The revenue should be recorded when the CPA: O A. receives payments from the clients O B. bills the clients. OC. starts working on the tax returns O D. completes working on the tax returns. Click to select your answer. 11-50nm 99+arrow_forward
- Sarah is a local CPA who performs part-time bookkeeping services for local businesses and does tax returns during tax season. Sarah does not know about the AICPA Code of Conduct or the IRS Circular 230. Draft a memo for your files and an email to Sarah to answer the questions below. 1. Explain what parts of the AICPA Code of Conduct apply to Sarah. 2. Explain what parts of the IRS Circular 230 apply to Sarah.arrow_forwardAssume: You are a financial adviser and are approached by a married couple, Tom, and Rita Brown. Both are 71 years old and Australian citizens by birth. While they live in Melbourne, their only son who is financially independent lives in Canberra. The following information is an extract of data you gathered as part of the fact-finding exercise during an initial client consultation with them: The couple has approached you to find out if they are eligible for age pension. list of assets for the current financial year Assets Amounts Income Home (Principal Residence) $700,000.00 Home Contents and Cars $57,000.00 Investment Property- net rental income of $7,000 $255,000.00 17,000.00 Bank account- interest Rate of 2% 50,000.00 1,000.00 Shares Portfolio 341,000.00 11,935.00 You are required to provide calculations for the means test (asset and the Income test) and use this to suggest old age pension…arrow_forwardA new client has just contacted you to prepare their business tax return for the current year. He just opened his small landscaping business during the current fiscal year. The client owns equipment, travels from one place to another, has 3 employees and 20 landscaping clients. The owner does not keep records and has no accounting experience. He discusses how he would handle this situation taking into account any ethical and professional considerations.arrow_forward
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