FederaljTaxjResearch,j13thjEdition Pagej1-1
Solution Manual j
FederaljTaxjResearch
byjRobyjSawyers,jStevenjGill
13thjEdition
SOLUTION MANUAL!!!
j
, Pagej1-2 SOLUTIONSjMANUAL
SolutionjManualjFederaljTaxjResearchj13thjEditionjbyjRobyjSawyers,jStevenjGill
CHAPTERj1
INTRODUCTIONjTOjTAXjPRACTICEjANDjETHICS
DISCUSSIONjQUESTIONS
1-1.
InjthejUnitedjStates,jthejtaxjsystemjisjanjoutgrowthjofjthejfollowingjfivejdisciplines:jla
w,jaccounting,jeconomics,jpoliticaljscience,jandjsociology.jThejenvironmentjforjthejtaxjsystemji
sjprovidedjbyjthejprinciplesjofjeconomics,jsociology,jandjpoliticaljscience,jwhilejthejlegaljandj
accountingjfieldsjarejresponsiblejforjthejsystem‘sjinterpretationjandjapplication.
Eachjofjthesejdisciplinesjaffectsjthisjcountry‘sjtaxjsystemjinjajuniquejway.jEconomistsjaddressjs
uchjissuesjasjhowjproposedjtaxjlegislationjwilljaffectjthejratejofjinflationjorjeconomicjgrowth.jM
easurementjofjthejsocialjequityjofjajtaxjandjdeterminingjwhetherjajtaxjsystemjdiscriminatesjagai
nstjcertainjtaxpayersjarejissuesjthatjarejexaminedjbyjsociologistsjandjpoliticaljscientists.jFinally,
jattorneysjarejresponsiblejforjthejinterpretationjofjthejtaxationjstatutes,jandjaccountantsjensurejth
atjthesejsamejstatutesjarejappliedjconsistently.
Pagej4
1-2. Thejotherjmajorjcategoriesjofjtaxjpracticejinjadditionjtojtaxjresearchjarejasjfollows:
• Taxjcompliance
• Taxjplanning
• Taxjlitigationj
Pagej5
1-3.
Taxjcompliancejconsistsjofjgatheringjpertinentjinformation,jevaluatingjandjclassifying
jthatjinformation,jandjfilingjanyjnecessaryjtaxjreturns.jCompliancejalsojincludesjotherjfunctions
jnecessaryjtojsatisfyjgovernmentaljrequirements,jsuchjasjrepresentingjajclientjduringjanjInternalj
RevenuejServicej(IRS)jaudit.
SolutionjManual@j2024
,FederaljTaxjResearch,j13thjEdition Pagej1-3
Pagej5
1-4.
Mostjofjthejtaxjcompliancejworkjisjperformedjbyjcommercialjtaxjpreparers,jenrolledjag
entsj(EAs),jattorneys,jandjcertifiedjpublicjaccountantsj(CPAs).jNoncomplexjindividual,jpartners
hip,jandjcorporatejtaxjreturnsjoftenjarejcompletedjbyjcommercialjtaxjpreparers.jThejpreparationj
ofjmorejcomplexjreturnsjusuallyjisjperformedjbyjEAs,jattorneys,jandjCPAs.jThejlatterjgroupsjals
ojprovidejtaxjplanningjservicesjandjrepresentjtheirjclientsjbeforejthejIRS.
AnjEAjisjonejwhojisjadmittedjtojpracticejbeforejthejIRSjbyjpassingjajspecialjIRS-
administeredjexamination,jorjwhojhasjworkedjforjthejIRSjforjfivejyearsjandjisjissuedjajpermitjtojre
presentjclientsjbeforejthejIRS.jCPAsjandjattorneysjarejnotjrequiredjtojtakejthisjexaminationjandjarej
automaticallyjadmittedjtojpracticejbeforejthejIRSjifjtheyjarejinjgoodjstandingjwithjthejappropriatejpr
ofessionaljlicensingjboard.
Pagej5jandjCircularj230
1-5.
Taxjplanningjisjthejprocessjofjarrangingjone‘sjfinancialjaffairsjtojminimizejanyjtaxjliability
.jMuchjofjmodernjtaxjpracticejcentersjaroundjthisjprocess,jandjthejresultingjoutcomejisjtaxjavoidan
ce.
Therejisjnothingjillegaljorjimmoraljinjthejavoidancejofjtaxationjasjlongjasjthejtaxpayerjremainsjwit
hinjlegaljbounds.jInjcontrast,jtaxjevasionjconstitutesjthejillegaljnonpaymentjofjajtaxjandjcannotjbejco
ndoned.jActivitiesjofjthisjsortjclearlyjviolatejexistingjlegaljconstraintsjandjfalljoutsidejofjthejdomai
njofjthejprofessionaljtaxjpractitioner.
Pagej6
1-6.
Injanjopenjtaxjplanningjsituation,jthejtransactionjisjnotjyetjcomplete;jtherefore,jthejtaxjpract
itionerjmaintainsjsomejdegreejofjcontroljoverjthejpotentialjtaxjliability,jandjthejtransactionjmayjbej
modi-
jfiedjtojachievejajmorejfavorablejtaxjtreatment.jInjajclosedjtransactionjhowever,jalljofjthejpertinentja
ctionsjhavejbeenjcompleted,jandjtaxjplanningjactivitiesjmayjbejlimitedjtojthejpresentationjofjthejsit
uationjtojthejgovernmentjinjthejmostjlegallyjadvantageousjmannerjpossible.
, Pagej1-4 SOLUTIONSjMANUAL
Pagej6
1-7.
TaxjlitigationjisjthejprocessjofjsettlingjajdisputejwithjthejIRSjinjajcourtjofjlaw.jTypicall
y,jajtaxjattorneyjhandlesjtaxjlitigationjthatjprogressesjbeyondjthejfinaljIRSjappeal.
Pagej6
1-8. CPAsjservejisjajsupportjcapacityjinjtaxjlitigation.
Pagej6
1-9.
Taxjresearchjconsistsjofjthejresolutionjofjunansweredjtaxationjquestions.jThejtaxjresearchj
processjincludesjthejfollowing:
1. Identificationj ofjpertinentjissues;
2. Specificationjofjproperjauthorities;
3. Evaluationjofjthejproprietyjofjauthorities;jand,
4. Applicationjofjauthoritiesjtojajspecificjsituation.
Pagej6
1-10.
Circularj230jisjissuedjbyjthejTreasuryjDepartmentjandjappliesjtojalljwhojpracticejbeforejt
hejIRS.jPagej7
1-11.
InjadditionjtojCircularj230,jCPAsjmustjfollowjthejAICPA‘sjCodejofjProfessionaljCond
uctjandjStatementsjonjStandardsjforjTaxjServices.jCPAsjmustjalsojabidejbyjthejrulesjofjthejappro
priatejstatejboard(s)jofjaccountancy.
Pagej7
1-12. Ajreturnjpreparerjmustjobtainj18jhoursjofjcontinuingjeducationjfromjanjIRS-
approvedjCEjProvider.jThejhoursjmustjincludejaj6jcreditjhourjAnnualjFederaljTaxjRefresherjcours
ej(AFTR)jthatjcoversjfilingjseasonjissuesjandjtaxjlawjupdates.jThejAFTRjcoursejmustjincludejajkno
wledge-jbasedjcomprehensionjtestjadministeredjatjthejconclusionjofjthejcoursejbyjthejCEjProvider.
SolutionjManual@j2024
Solution Manual j
FederaljTaxjResearch
byjRobyjSawyers,jStevenjGill
13thjEdition
SOLUTION MANUAL!!!
j
, Pagej1-2 SOLUTIONSjMANUAL
SolutionjManualjFederaljTaxjResearchj13thjEditionjbyjRobyjSawyers,jStevenjGill
CHAPTERj1
INTRODUCTIONjTOjTAXjPRACTICEjANDjETHICS
DISCUSSIONjQUESTIONS
1-1.
InjthejUnitedjStates,jthejtaxjsystemjisjanjoutgrowthjofjthejfollowingjfivejdisciplines:jla
w,jaccounting,jeconomics,jpoliticaljscience,jandjsociology.jThejenvironmentjforjthejtaxjsystemji
sjprovidedjbyjthejprinciplesjofjeconomics,jsociology,jandjpoliticaljscience,jwhilejthejlegaljandj
accountingjfieldsjarejresponsiblejforjthejsystem‘sjinterpretationjandjapplication.
Eachjofjthesejdisciplinesjaffectsjthisjcountry‘sjtaxjsystemjinjajuniquejway.jEconomistsjaddressjs
uchjissuesjasjhowjproposedjtaxjlegislationjwilljaffectjthejratejofjinflationjorjeconomicjgrowth.jM
easurementjofjthejsocialjequityjofjajtaxjandjdeterminingjwhetherjajtaxjsystemjdiscriminatesjagai
nstjcertainjtaxpayersjarejissuesjthatjarejexaminedjbyjsociologistsjandjpoliticaljscientists.jFinally,
jattorneysjarejresponsiblejforjthejinterpretationjofjthejtaxationjstatutes,jandjaccountantsjensurejth
atjthesejsamejstatutesjarejappliedjconsistently.
Pagej4
1-2. Thejotherjmajorjcategoriesjofjtaxjpracticejinjadditionjtojtaxjresearchjarejasjfollows:
• Taxjcompliance
• Taxjplanning
• Taxjlitigationj
Pagej5
1-3.
Taxjcompliancejconsistsjofjgatheringjpertinentjinformation,jevaluatingjandjclassifying
jthatjinformation,jandjfilingjanyjnecessaryjtaxjreturns.jCompliancejalsojincludesjotherjfunctions
jnecessaryjtojsatisfyjgovernmentaljrequirements,jsuchjasjrepresentingjajclientjduringjanjInternalj
RevenuejServicej(IRS)jaudit.
SolutionjManual@j2024
,FederaljTaxjResearch,j13thjEdition Pagej1-3
Pagej5
1-4.
Mostjofjthejtaxjcompliancejworkjisjperformedjbyjcommercialjtaxjpreparers,jenrolledjag
entsj(EAs),jattorneys,jandjcertifiedjpublicjaccountantsj(CPAs).jNoncomplexjindividual,jpartners
hip,jandjcorporatejtaxjreturnsjoftenjarejcompletedjbyjcommercialjtaxjpreparers.jThejpreparationj
ofjmorejcomplexjreturnsjusuallyjisjperformedjbyjEAs,jattorneys,jandjCPAs.jThejlatterjgroupsjals
ojprovidejtaxjplanningjservicesjandjrepresentjtheirjclientsjbeforejthejIRS.
AnjEAjisjonejwhojisjadmittedjtojpracticejbeforejthejIRSjbyjpassingjajspecialjIRS-
administeredjexamination,jorjwhojhasjworkedjforjthejIRSjforjfivejyearsjandjisjissuedjajpermitjtojre
presentjclientsjbeforejthejIRS.jCPAsjandjattorneysjarejnotjrequiredjtojtakejthisjexaminationjandjarej
automaticallyjadmittedjtojpracticejbeforejthejIRSjifjtheyjarejinjgoodjstandingjwithjthejappropriatejpr
ofessionaljlicensingjboard.
Pagej5jandjCircularj230
1-5.
Taxjplanningjisjthejprocessjofjarrangingjone‘sjfinancialjaffairsjtojminimizejanyjtaxjliability
.jMuchjofjmodernjtaxjpracticejcentersjaroundjthisjprocess,jandjthejresultingjoutcomejisjtaxjavoidan
ce.
Therejisjnothingjillegaljorjimmoraljinjthejavoidancejofjtaxationjasjlongjasjthejtaxpayerjremainsjwit
hinjlegaljbounds.jInjcontrast,jtaxjevasionjconstitutesjthejillegaljnonpaymentjofjajtaxjandjcannotjbejco
ndoned.jActivitiesjofjthisjsortjclearlyjviolatejexistingjlegaljconstraintsjandjfalljoutsidejofjthejdomai
njofjthejprofessionaljtaxjpractitioner.
Pagej6
1-6.
Injanjopenjtaxjplanningjsituation,jthejtransactionjisjnotjyetjcomplete;jtherefore,jthejtaxjpract
itionerjmaintainsjsomejdegreejofjcontroljoverjthejpotentialjtaxjliability,jandjthejtransactionjmayjbej
modi-
jfiedjtojachievejajmorejfavorablejtaxjtreatment.jInjajclosedjtransactionjhowever,jalljofjthejpertinentja
ctionsjhavejbeenjcompleted,jandjtaxjplanningjactivitiesjmayjbejlimitedjtojthejpresentationjofjthejsit
uationjtojthejgovernmentjinjthejmostjlegallyjadvantageousjmannerjpossible.
, Pagej1-4 SOLUTIONSjMANUAL
Pagej6
1-7.
TaxjlitigationjisjthejprocessjofjsettlingjajdisputejwithjthejIRSjinjajcourtjofjlaw.jTypicall
y,jajtaxjattorneyjhandlesjtaxjlitigationjthatjprogressesjbeyondjthejfinaljIRSjappeal.
Pagej6
1-8. CPAsjservejisjajsupportjcapacityjinjtaxjlitigation.
Pagej6
1-9.
Taxjresearchjconsistsjofjthejresolutionjofjunansweredjtaxationjquestions.jThejtaxjresearchj
processjincludesjthejfollowing:
1. Identificationj ofjpertinentjissues;
2. Specificationjofjproperjauthorities;
3. Evaluationjofjthejproprietyjofjauthorities;jand,
4. Applicationjofjauthoritiesjtojajspecificjsituation.
Pagej6
1-10.
Circularj230jisjissuedjbyjthejTreasuryjDepartmentjandjappliesjtojalljwhojpracticejbeforejt
hejIRS.jPagej7
1-11.
InjadditionjtojCircularj230,jCPAsjmustjfollowjthejAICPA‘sjCodejofjProfessionaljCond
uctjandjStatementsjonjStandardsjforjTaxjServices.jCPAsjmustjalsojabidejbyjthejrulesjofjthejappro
priatejstatejboard(s)jofjaccountancy.
Pagej7
1-12. Ajreturnjpreparerjmustjobtainj18jhoursjofjcontinuingjeducationjfromjanjIRS-
approvedjCEjProvider.jThejhoursjmustjincludejaj6jcreditjhourjAnnualjFederaljTaxjRefresherjcours
ej(AFTR)jthatjcoversjfilingjseasonjissuesjandjtaxjlawjupdates.jThejAFTRjcoursejmustjincludejajkno
wledge-jbasedjcomprehensionjtestjadministeredjatjthejconclusionjofjthejcoursejbyjthejCEjProvider.
SolutionjManual@j2024
