Solution Manual For Federal Tax Research, 13th Edition by Roby Sawyers, Steven Gill, All Chapters 1 to 13 complete Verified editon ISBN: 9780357988411

Federal Tax Research, 13th
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Edition
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Solution Manual Federal Tax Research
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13th Edition by Roby Sawyers, Steven Gill
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gh Chapters 1 -13 gh gh

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CHAPTER 1 gh




INTRODUCTION TO TAX PRACTICE AND ETHICS gh gh gh gh gh




DISCUSSION QUESTIONS
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1-1. In the United States, the tax system is an outgrowth of the following five disciplines: law,
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gh accounting, economics, political science, and sociology. The environment for the tax
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gh system isp rovided by the principles of economics, sociology, and political science, while
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gh the legal and accounting fields are responsible for the system‘s interpretation and
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gh application.


Each of these disciplines affects this country‘s tax system in a unique way. Economists
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gh addresssuch issues as how proposed tax legislation will affect the rate of inflation or
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gh economic growth. Measurement of the social equity of a tax and determining whether a tax
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gh system discriminates against certain taxpayers are issues that are examined by sociologists
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gh and political scientists.
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Finally, attorneys are responsible for the interpretation of the taxation statutes, and
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accountantsensure that these same statutes are applied consistently.****8880()
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1-2. The other major categories of tax practice in addition to tax research are as follows:
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 Tax compliance gh




 Tax planning gh




 Tax


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1-3. Tax compliance consists of gathering pertinent information, evaluating and classifying that
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gh information, and filing any necessary tax returns. Compliance also includes other functions
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gh necessary to satisfy governmental requirements, such as representing a client during an
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gh InternalRevenue Service (IRS) audit.
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,Federal Tax Research, 13th
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Edition
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1-4. Most of the tax compliance work is performed by commercial tax preparers, enrolled
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gh agents (EAs), attorneys, and certified public accountants (CPAs). Noncomplex individual,
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gh partnership, and corporate tax returns often are completed by commercial tax preparers. The
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gh preparation of more complex returns usually is performed by EAs, attorneys, and CPAs.
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gh The latter groups alsop rovide tax planning services and represent their clients before the
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gh IRS.


An EA is one who is admitted to practice before the IRS by passing a special IRS-
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administered examination, or who has worked for the IRS for five years and is issued a
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gh permit to represent clients before the IRS. CPAs and attorneys are not required to take this
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gh examination and are automatically admitted to practice before the IRS if they are in good
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gh standing with the appropriateprofessional licensing board.
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Page 5 and Circular 230
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1-5. Tax planning is the process of arranging one‘s financial affairs to minimize any tax liability.
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gh Mucho f modern tax practice centers around this process, and the resulting outcome is tax
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gh avoidance.
There is nothing illegal or immoral in the avoidance of taxation as long as the taxpayer
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gh remains within legal bounds. In contrast, tax evasion constitutes the illegal nonpayment of a
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gh tax and cannotb e condoned. Activities of this sort clearly violate existing legal constraints
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gh and fall outside of the domain of the professional tax practitioner.
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1-6. In an open tax planning situation, the transaction is not yet complete; therefore, the tax
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gh practitioner maintains some degree of control over the potential tax liability, and the
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gh transaction may be modi- fied to achieve a more favorable tax treatment. In a closed
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gh transaction however, all of the pertinentactions have been completed, and tax planning
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gh activities may be limited to the presentation of the situation to the government in the most
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gh legally advantageous manner possible.
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1-7. Tax litigation is the process of settling a dispute with the IRS in a court of law. Typically,
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gh a tax attorney handles tax litigation that progresses beyond the final IRS appeal.
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1-8. CPAs serve is a support capacity in tax litigation.
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1-9. Tax research consists of the resolution of unanswered taxation questions. The tax research
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gh processincludes the following:
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1. Identification of pertinent issues; gh gh gh




2. Specification of proper authorities; gh gh gh




3. Evaluation of the propriety of authorities; and, gh gh gh gh gh gh




4. Application of authorities to a specific situation. gh gh gh gh gh gh




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1-10. Circular 230 is issued by the Treasury Department and applies to all who practice before the
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gh IRS.Page 7 hg gh




1-11. In addition to Circular 230, CPAs must follow the AICPA‘s Code of Professional Conduct
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gh and Statements on Standards for Tax Services. CPAs must also abide by the rules of the
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gh appropriatestate board(s) of accountancy.
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1-12. A return preparer must obtain 18 hours of continuing education from an IRS-approved CE
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gh Provider. The hours must include a 6 credit hour Annual Federal Tax Refresher course
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gh (AFTR) that covers filing season issues and tax law updates. The AFTR course must include
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gh a knowledge-b ased comprehension test administered at the conclusion of the course by the
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gh CE Provider.
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