Federal Tax Research 12th Edition Solution Manual - Roby & Sawyers

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Solution Manual g g


FederalgTaxgResearchgbygRob
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12thgEditiong
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g SOLUTION MANUAL!!! g g

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Pageg1-2g SOLUTIONSgMANUALg
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SolutiongManualgFederalgTaxgResearchg12thgEditiongbygRobygSawyers,gStevengGillg
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CHAPTERg1g
INTRODUCTIONgTOgTAXgPRACTICEgANDgETHICSg
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DISCUSSIONgQUESTIONSg
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1-1.g
IngthegUnitedgStates,gthegtaxgsystemgisgangoutgrowthgofgthegfollowinggfivegdisciplines:gla
w,gaccounting,geconomics,gpoliticalgscience,gandgsociology.gThegenvironmentgforgthegtaxgsystemg
isgprovidedgbygthegprinciplesgofgeconomics,gsociology,gandgpoliticalgscience,gwhilegtheglegalgand
gaccountinggfieldsgaregresponsiblegforgthegsystem‘sginterpretationgandgapplication.g

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Eachgofgthesegdisciplinesgaffectsgthisgcountry‘sgtaxgsystemgingaguniquegway.gEconomistsgaddress
gsuchgissuesgasghowgproposedgtaxglegislationgwillgaffectgthegrategofginflationgorgeconomicggrowt

h.gMeasurementgofgthegsocialgequitygofgagtaxgandgdetermininggwhethergagtaxgsystemgdiscriminate
sgagainstgcertaingtaxpayersgaregissuesgthatgaregexaminedgbygsociologistsgandgpoliticalgscientists.g
Finally,gattorneysgaregresponsiblegforgtheginterpretationgofgthegtaxationgstatutes,gandgaccountantsg
ensuregthatgthesegsamegstatutesgaregappliedgconsistently.g

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1-2.g Thegothergmajorgcategoriesgofgtaxgpracticegingadditiongtogtaxgresearchgaregasgfollows:g

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• Taxgcomplianceg
• Taxgplanningg
• Taxglitigationg


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1-3. Taxgcompliancegconsistsgofggatheringgpertinentginformation,gevaluatinggandgclassifyinggthatginfor
mation,gandgfilingganygnecessarygtaxgreturns.gCompliancegalsogincludesgothergfunctionsgnecessar
ygtogsatisfyggovernmentalgrequirements,gsuchgasgrepresentinggagclientgduringgangInternalgRevenu
egServiceg(IRS)gaudit.g
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1-4. Mostgofgthegtaxgcompliancegworkgisgperformedgbygcommercialgtaxgpreparers,genrolledgagentsg(E
As),gattorneys,gandgcertifiedgpublicgaccountantsg(CPAs).gNoncomplexgindividual,gpartnership,gan
dgcorporategtaxgreturnsgoftengaregcompletedgbygcommercialgtaxgpreparers.gThegpreparationgofgmo
regcomplexgreturnsgusuallygisgperformedgbygEAs,gattorneys,gandgCPAs.gTheglatterggroupsgalsogpr
ovidegtaxgplanninggservicesgandgrepresentgtheirgclientsgbeforegthegIRS.g

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AngEAgisgonegwhogisgadmittedgtogpracticegbeforegthegIRSgbygpassinggagspecialgIRS-
administeredgexamination,gorgwhoghasgworkedgforgthegIRSgforgfivegyearsgandgisgissuedgagpermitg
togrepresentgclientsgbeforegthegIRS.gCPAsgandgattorneysgaregnotgrequiredgtogtakegthisgexaminatio
ngandgaregautomaticallygadmittedgtogpracticegbeforegthegIRSgifgtheygareginggoodgstandinggwithgth
egappropriategprofessionalglicensinggboard.g
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Pageg5gandgCircularg230g
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1-5. Taxgplanninggisgthegprocessgofgarranginggone‘sgfinancialgaffairsgtogminimizeganygtaxgliability.gM
uchgofgmoderngtaxgpracticegcentersgaroundgthisgprocess,gandgthegresultinggoutcomegisgtaxgavoida
nce.gTheregisgnothinggillegalgorgimmoralgingthegavoidancegofgtaxationgasglonggasgthegtaxpayergre
mainsgwithinglegalgbounds.gIngcontrast,gtaxgevasiongconstitutesgthegillegalgnonpaymentgofgagtaxga
ndgcannotgbegcondoned.gActivitiesgofgthisgsortgclearlygviolategexistingglegalgconstraintsgandgfallg
outsidegofgthegdomaingofgthegprofessionalgtaxgpractitioner.g

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1-6. Ingangopengtaxgplanninggsituation,gthegtransactiongisgnotgyetgcomplete;gtherefore,gthegtaxgpractitio
nergmaintainsgsomegdegreegofgcontrolgovergthegpotentialgtaxgliability,gandgthegtransactiongmaygbe
gmodi-

gfiedgtogachievegagmoregfavorablegtaxgtreatment.gIngagclosedgtransactionghowever,gallgofgthegperti

nentgactionsghavegbeengcompleted,gandgtaxgplanninggactivitiesgmaygbeglimitedgtogthegpresentatio
ngofgthegsituationgtogtheggovernmentgingthegmostglegallygadvantageousgmannergpossible.g
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1-7. TaxglitigationgisgthegprocessgofgsettlinggagdisputegwithgthegIRSgingagcourtgofglaw.gTypically,gagta
xgattorneyghandlesgtaxglitigationgthatgprogressesgbeyondgthegfinalgIRSgappeal.g

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Pageg1-4g SOLUTIONSgMANUALg
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1-8. CPAsgservegisgagsupportgcapacitygingtaxglitigation.g
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1-9. Taxgresearchgconsistsgofgthegresolutiongofgunansweredgtaxationgquestions.gThegtaxgresearchgproc
essgincludesgthegfollowing:g
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1. Identificationgofgpertinentgissues;g
2. Specificationgofgpropergauthorities;g
3. Evaluationgofgthegproprietygofgauthorities;gand,g
4. Applicationgofgauthoritiesgtogagspecificgsituation.g
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1-10. Circularg230gisgissuedgbygthegTreasurygDepartmentgandgappliesgtogallgwhogpracticegbeforegthegIR
S.g


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1-11. IngadditiongtogCircularg230,gCPAsgmustgfollowgthegAICPA‘sgCodegofgProfessionalgConductgandg
StatementsgongStandardsgforgTaxgServices.gCPAsgmustgalsogabidegbygthegrulesgofgthegappropriate
gstategboard(s)gofgaccountancy.g

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1-12. Agreturngpreparergmustgobtaing18ghoursgofgcontinuinggeducationgfromgangIRS-
approvedgCEgProvider.gTheghoursgmustgincludegag6gcreditghourgAnnualgFederalgTaxgRefreshergc
ourseg(AFTR)gthatgcoversgfilinggseasongissuesgandgtaxglawgupdates.gThegAFTRgcoursegmustgincl
udegagknowledge-
gbasedgcomprehensiongtestgadministeredgatgthegconclusiongofgthegcoursegbygthegCEgProvider.g

Limitedgpracticegrightsgallowgindividualsgtogrepresentgclientsgwhosegreturnsgtheygprepared
gandgsigned,gbutgonlygbeforegrevenuegagents,gcustomergservicegrepresentatives,gandgsimila

rgIRSgemployees.g
Pageg10gandgIRS.govg
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1-13. False.gOnlygcommunicationgwithgthegIRSgconcerninggagtaxpayer‘sgrights,gprivileges,gorgliabilitygi
sgincluded.gPracticegbeforegthegIRSgdoesgnotgincludegrepresentationgbeforegthegTaxgCourt.g

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SolutiongManual@g2024g