FederalVTaxVResearch,V12thVEdit PageV1-1
ion
Solution Manual V
FederalVTaxVResearch
byVRobyVSawyers,VStevenVGill
12thVEdition
SOLUTION MANUAL!!!
V
, PageV1-2 SOLUTIONSVMANUA
L
SolutionVManualVFederalVTaxVResearchV12thVEditionVbyVRobyVSawyers, VStevenVGill
CHAPTERV1
INTRODUCTIONVTOVTAXVPRACTICEVANDVETHICS
DISCUSSIONVQUESTIONS
1-1.
InVtheVUnitedVStates,VtheVtaxVsystemVisVanVoutgrowthVofVtheVfollowingVfiveV
disciplines:Vlaw,Vaccounting,Veconomics,VpoliticalVscience,VandVsociology.VTheVenviron
mentVforVtheVtaxVsystemVisVprovidedVbyVtheVprinciplesVofVeconomics,Vsociology,VandV
politicalVscience,VwhileVtheVlegalVandVaccountingVfieldsVareVresponsibleVforVtheVsyste
m‘sVinterpretationVandVapplication.
EachVofVtheseVdisciplinesVaffectsVthisVcountry‘sVtaxVsystemVinVaVuniqueVway.VEconomi
stsVaddressVsuchVissuesVasVhowVproposedVtaxVlegislationVwillVaffectVtheVrateVofVinflatio
nVorVeconomicVgrowth.VMeasurementVofVtheVsocialVequityVofVaVtaxVandVdeterminingV
whetherVaVtaxVsystemVdiscriminatesVagainstVcertainVtaxpayersVareVissuesVthatVareVexam
inedVbyVsociologistsVandVpoliticalVscientists.VFinally,VattorneysVareVresponsibleVforVtheV
interpretationVofVtheVtaxationVstatutes,VandVaccountantsVensureVthatVtheseVsameVstatutes
VareVappliedVconsistently.
PageV4
1-2. TheVotherVmajorVcategoriesVofVtaxVpracticeVinVadditionVtoVtaxVresearchVareVasVfollows:
• TaxVcompliance
• TaxVplanning
• TaxVlitigatio
nVPageV5
1-3.
TaxVcomplianceVconsistsVofVgatheringVpertinentVinformation,VevaluatingVandVcl
assifyingVthatVinformation,VandVfilingVanyVnecessaryVtaxVreturns.VComplianceValsoVincl
udesVotherVfunctionsVnecessaryVtoVsatisfyVgovernmentalVrequirements,VsuchVasVrepresent
ingVaVclientVduringVanVInternalVRevenueVServiceV(IRS)Vaudit.
SolutionVManual@V202
,FederalVTaxVResearch,V12thVEdit PageV1-3
ion
PageV5
1-4.
MostVofVtheVtaxVcomplianceVworkVisVperformedVbyVcommercialVtaxVpreparers,
VenrolledVagentsV(EAs),Vattorneys,VandVcertifiedVpublicVaccountantsV(CPAs).VNoncomple
xVindividual,Vpartnership,VandVcorporateVtaxVreturnsVoftenVareVcompletedVbyVcommercia
lVtaxVpreparers.VTheVpreparationVofVmoreVcomplexVreturnsVusuallyVisVperformedVbyVEA
s,Vattorneys,VandVCPAs.VTheVlatterVgroupsValsoVprovideVtaxVplanningVservicesVandVrepr
esentVtheirVclientsVbeforeVtheVIRS.
AnVEAVisVoneVwhoVisVadmittedVtoVpracticeVbeforeVtheVIRSVbyVpassingVaVspecialVIRS-
administeredVexamination,VorVwhoVhasVworkedVforVtheVIRSVforVfiveVyearsVandVisVissued
VaVpermitVtoVrepresentVclientsVbeforeVtheVIRS.VCPAsVandVattorneysVareVnotVrequiredVtoV
takeVthisVexaminationVandVareVautomaticallyVadmittedVtoVpracticeVbeforeVtheVIRSVifVtheyV
areVinVgoodVstandingVwithVtheVappropriateVprofessionalVlicensingVboard.
PageV5VandVCircularV230
1-5.
TaxVplanningVisVtheVprocessVofVarrangingVone‘sVfinancialVaffairsVtoVminimizeVany
VtaxVliability.VMuchVofVmodernVtaxVpracticeVcentersVaroundVthisVprocess,VandVtheVresultin
gVoutcomeVisVtaxVavoidance.
ThereVisVnothingVillegalVorVimmoralVinVtheVavoidanceVofVtaxationVasVlongVasVtheVtaxpay
erVremainsVwithinVlegalVbounds.VInVcontrast,VtaxVevasionVconstitutesVtheVillegalVnonpayme
ntVofVaVtaxVandVcannotVbeVcondoned.VActivitiesVofVthisVsortVclearlyVviolateVexistingVlegal
VconstraintsVandVfallVoutsideVofVtheVdomainVofVtheVprofessionalVtaxVpractitioner.
PageV6
1-6.
InVanVopenVtaxVplanningVsituation,VtheVtransactionVisVnotVyetVcomplete;Vtherefore,
VtheVtaxVpractitionerVmaintainsVsomeVdegreeVofVcontrolVoverVtheVpotentialVtaxVliability,Van
dVtheVtransactionVmayVbeVmodi-
VfiedVtoVachieveVaVmoreVfavorableVtaxVtreatment.VInVaVclosedVtransactionVhowever,VallVof
VtheVpertinentVactionsVhaveVbeenVcompleted,VandVtaxVplanningVactivitiesVmayVbeVlimitedV
, PageV1-4 SOLUTIONSVMANUA
L Vadvantageous
toVtheVpresentationVofVtheVsituationVtoVtheVgovernmentVinVtheVmostVlegally
VmannerVpossible.
SolutionVManual@V202
ion
Solution Manual V
FederalVTaxVResearch
byVRobyVSawyers,VStevenVGill
12thVEdition
SOLUTION MANUAL!!!
V
, PageV1-2 SOLUTIONSVMANUA
L
SolutionVManualVFederalVTaxVResearchV12thVEditionVbyVRobyVSawyers, VStevenVGill
CHAPTERV1
INTRODUCTIONVTOVTAXVPRACTICEVANDVETHICS
DISCUSSIONVQUESTIONS
1-1.
InVtheVUnitedVStates,VtheVtaxVsystemVisVanVoutgrowthVofVtheVfollowingVfiveV
disciplines:Vlaw,Vaccounting,Veconomics,VpoliticalVscience,VandVsociology.VTheVenviron
mentVforVtheVtaxVsystemVisVprovidedVbyVtheVprinciplesVofVeconomics,Vsociology,VandV
politicalVscience,VwhileVtheVlegalVandVaccountingVfieldsVareVresponsibleVforVtheVsyste
m‘sVinterpretationVandVapplication.
EachVofVtheseVdisciplinesVaffectsVthisVcountry‘sVtaxVsystemVinVaVuniqueVway.VEconomi
stsVaddressVsuchVissuesVasVhowVproposedVtaxVlegislationVwillVaffectVtheVrateVofVinflatio
nVorVeconomicVgrowth.VMeasurementVofVtheVsocialVequityVofVaVtaxVandVdeterminingV
whetherVaVtaxVsystemVdiscriminatesVagainstVcertainVtaxpayersVareVissuesVthatVareVexam
inedVbyVsociologistsVandVpoliticalVscientists.VFinally,VattorneysVareVresponsibleVforVtheV
interpretationVofVtheVtaxationVstatutes,VandVaccountantsVensureVthatVtheseVsameVstatutes
VareVappliedVconsistently.
PageV4
1-2. TheVotherVmajorVcategoriesVofVtaxVpracticeVinVadditionVtoVtaxVresearchVareVasVfollows:
• TaxVcompliance
• TaxVplanning
• TaxVlitigatio
nVPageV5
1-3.
TaxVcomplianceVconsistsVofVgatheringVpertinentVinformation,VevaluatingVandVcl
assifyingVthatVinformation,VandVfilingVanyVnecessaryVtaxVreturns.VComplianceValsoVincl
udesVotherVfunctionsVnecessaryVtoVsatisfyVgovernmentalVrequirements,VsuchVasVrepresent
ingVaVclientVduringVanVInternalVRevenueVServiceV(IRS)Vaudit.
SolutionVManual@V202
,FederalVTaxVResearch,V12thVEdit PageV1-3
ion
PageV5
1-4.
MostVofVtheVtaxVcomplianceVworkVisVperformedVbyVcommercialVtaxVpreparers,
VenrolledVagentsV(EAs),Vattorneys,VandVcertifiedVpublicVaccountantsV(CPAs).VNoncomple
xVindividual,Vpartnership,VandVcorporateVtaxVreturnsVoftenVareVcompletedVbyVcommercia
lVtaxVpreparers.VTheVpreparationVofVmoreVcomplexVreturnsVusuallyVisVperformedVbyVEA
s,Vattorneys,VandVCPAs.VTheVlatterVgroupsValsoVprovideVtaxVplanningVservicesVandVrepr
esentVtheirVclientsVbeforeVtheVIRS.
AnVEAVisVoneVwhoVisVadmittedVtoVpracticeVbeforeVtheVIRSVbyVpassingVaVspecialVIRS-
administeredVexamination,VorVwhoVhasVworkedVforVtheVIRSVforVfiveVyearsVandVisVissued
VaVpermitVtoVrepresentVclientsVbeforeVtheVIRS.VCPAsVandVattorneysVareVnotVrequiredVtoV
takeVthisVexaminationVandVareVautomaticallyVadmittedVtoVpracticeVbeforeVtheVIRSVifVtheyV
areVinVgoodVstandingVwithVtheVappropriateVprofessionalVlicensingVboard.
PageV5VandVCircularV230
1-5.
TaxVplanningVisVtheVprocessVofVarrangingVone‘sVfinancialVaffairsVtoVminimizeVany
VtaxVliability.VMuchVofVmodernVtaxVpracticeVcentersVaroundVthisVprocess,VandVtheVresultin
gVoutcomeVisVtaxVavoidance.
ThereVisVnothingVillegalVorVimmoralVinVtheVavoidanceVofVtaxationVasVlongVasVtheVtaxpay
erVremainsVwithinVlegalVbounds.VInVcontrast,VtaxVevasionVconstitutesVtheVillegalVnonpayme
ntVofVaVtaxVandVcannotVbeVcondoned.VActivitiesVofVthisVsortVclearlyVviolateVexistingVlegal
VconstraintsVandVfallVoutsideVofVtheVdomainVofVtheVprofessionalVtaxVpractitioner.
PageV6
1-6.
InVanVopenVtaxVplanningVsituation,VtheVtransactionVisVnotVyetVcomplete;Vtherefore,
VtheVtaxVpractitionerVmaintainsVsomeVdegreeVofVcontrolVoverVtheVpotentialVtaxVliability,Van
dVtheVtransactionVmayVbeVmodi-
VfiedVtoVachieveVaVmoreVfavorableVtaxVtreatment.VInVaVclosedVtransactionVhowever,VallVof
VtheVpertinentVactionsVhaveVbeenVcompleted,VandVtaxVplanningVactivitiesVmayVbeVlimitedV
, PageV1-4 SOLUTIONSVMANUA
L Vadvantageous
toVtheVpresentationVofVtheVsituationVtoVtheVgovernmentVinVtheVmostVlegally
VmannerVpossible.
SolutionVManual@V202
