Federal Tax Research, 13th Edition Page 1-1
Solution Manual Federal Tax Research
13th Edition By Roby Sawyers, Steven Gill
Chapters 1 -13
,Page 1-2 SOLUTIONS MANUAL
Chapter 1
Introduction To Tax Practice And Ethics
Discussion Questions
1-1. In The United States, The Tax System Is An Outgrowth Of The Following Five Disciplines:
Law, Accounting, Economics, Political Science, And Sociology. The Environment For The
Tax System Is Provided By The Principles Of Economics, Sociology, And Political Science,
While The Legal And Accounting Fields Are Responsible For The System‘S Interpretation
And Application.
Each Of These Disciplines Affects This Country‘S Tax System In A Unique Way. Economists
Address Such Issues As How Proposed Tax Legislation Will Affect The Rate Of Inflation Or
Economic Growth. Measurement Of The Social Equity Of A Tax And Determining Whether A
Tax System Discriminates Against Certain Taxpayers Are Issues That Are Examined By
Sociologists And Political Scientists.
Finally, Attorneys Are Responsible For The Interpretation Of The Taxation Statutes, And
Accountants Ensure That These Same Statutes Are Applied Consistently.****8880()
Page 4
1-2. The Other Major Categories Of Tax Practice In Addition To Tax Research Are As Follows:
• Tax Compliance
• Tax Planning
• Tax
Litigation Page 5
1-3. Tax Compliance Consists Of Gathering Pertinent Information, Evaluating And Classifying
That Information, And Filing Any Necessary Tax Returns. Compliance Also Includes Other
Functions Necessary To Satisfy Governmental Requirements, Such As Representing A Client
During An Internal Revenue Service (Irs) Audit.
,Federal Tax Research, 13th Edition Page 1-3
Page 5
1-4. Most Of The Tax Compliance Work Is Performed By Commercial Tax Preparers, Enrolled
Agents (Eas), Attorneys, And Certified Public Accountants (Cpas). Noncomplex Individual,
Partnership, And Corporate Tax Returns Often Are Completed By Commercial Tax Preparers.
The Preparation Of More Complex Returns Usually Is Performed By Eas, Attorneys, And Cpas.
The Latter Groups Also Provide Tax Planning Services And Represent Their Clients Before
The Irs.
An Ea Is One Who Is Admitted To Practice Before The Irs By Passing A Special Irs-
Administered Examination, Or Who Has Worked For The Irs For Five Years And Is Issued A
Permit To Represent Clients Before The Irs. Cpas And Attorneys Are Not Required To Take This
Examination And Are Automatically Admitted To Practice Before The Irs If They Are In Good
Standing With The Appropriate Professional Licensing Board.
Page 5 And Circular 230
1-5. Tax Planning Is The Process Of Arranging One‘S Financial Affairs To Minimize Any Tax
Liability. Much Of Modern Tax Practice Centers Around This Process, And The Resulting
Outcome Is Tax Avoidance.
There Is Nothing Illegal Or Immoral In The Avoidance Of Taxation As Long As The Taxpayer
Remains Within Legal Bounds. In Contrast, Tax Evasion Constitutes The Illegal Nonpayment Of
A Tax And Cannot Be Condoned. Activities Of This Sort Clearly Violate Existing Legal
Constraints And Fall Outside Of The Domain Of The Professional Tax Practitioner.
Page 6
1-6. In Can Copen Ctax Cplanning Csituation, Cthe Ctransaction Cis Cnot Cyet Ccomplete; Ctherefore,
Cthe Ctax Cpractitionercmaintains Csome Cdegree Cof Ccontrol Cover Cthe Cpotential Ctax
Cliability, Cand Cthe Ctransaction Cmay Cbe Cmodi- Cfied Cto Cachieve Ca Cmore Cfavorable Ctax
Ctreatment. Cin Ca Cclosed Ctransaction Chowever, Call Cof Cthe Cpertinentcactions Chave Cbeen
Ccompleted, Cand Ctax Cplanning Cactivities Cmay Cbe Climited Cto Cthe Cpresentation Cof Cthe
Csituation Cto Cthe Cgovernment Cin Cthe Cmost Clegally Cadvantageous Cmanner Cpossible.
, Page 1-4 SOLUTIONS MANUAL
Page C6
1-7. Tax Clitigation Cis Cthe Cprocess Cof Csettling Ca Cdispute Cwith Cthe Cirs Cin Ca Ccourt Cof
Claw. Ctypically, Ca Ctaxcattorney Chandles Ctax Clitigation Cthat Cprogresses Cbeyond Cthe
Cfinal Cirs Cappeal.
Page C6
1-8. Cpas Cserve Cis Ca Csupport Ccapacity Cin Ctax Clitigation.
Page C6
1-9. Tax Cresearch Cconsists Cof Cthe Cresolution Cof Cunanswered Ctaxation Cquestions. Cthe
Ctax Cresearch Cprocesscincludes Cthe Cfollowing:
1. Identification Cof Cpertinent Cissues;
2. Specification Cof Cproper Cauthorities;
3. Evaluation Cof Cthe Cpropriety Cof Cauthorities; Cand,
4. Application Cof Cauthorities Cto Ca Cspecific Csituation.
Page C6
1-10. Circular C230 Cis Cissued Cby Cthe Ctreasury Cdepartment Cand Capplies Cto Call Cwho
Cpractice Cbefore Cthe Cirs.Cpage C7
1-11. In Caddition Cto Ccircular C230, Ccpas Cmust Cfollow Cthe Caicpa‘S Ccode Cof Cprofessional
Cconduct Cand Cstatements Con Cstandards Cfor Ctax Cservices. Ccpas Cmust Calso Cabide Cby
Cthe Crules Cof Cthe Cappropriatecstate Cboard(S) Cof Caccountancy.
Page C7
1-12. A Creturn Cpreparer Cmust Cobtain C18 Chours Cof Ccontinuing Ceducation Cfrom Can Cirs-
Approved Cce Cprovider. Cthe Chours Cmust Cinclude Ca C6 Ccredit Chour Cannual Cfederal
Ctax Crefresher Ccourse C(Aftr) Cthat Ccovers Cfiling Cseason Cissues Cand Ctax Claw Cupdates.
Cthe Caftr Ccourse Cmust Cinclude Ca Cknowledge-Cbased Ccomprehension Ctest Cadministered
Cat Cthe Cconclusion Cof Cthe Ccourse Cby Cthe Cce Cprovider.
Solution Manual Federal Tax Research
13th Edition By Roby Sawyers, Steven Gill
Chapters 1 -13
,Page 1-2 SOLUTIONS MANUAL
Chapter 1
Introduction To Tax Practice And Ethics
Discussion Questions
1-1. In The United States, The Tax System Is An Outgrowth Of The Following Five Disciplines:
Law, Accounting, Economics, Political Science, And Sociology. The Environment For The
Tax System Is Provided By The Principles Of Economics, Sociology, And Political Science,
While The Legal And Accounting Fields Are Responsible For The System‘S Interpretation
And Application.
Each Of These Disciplines Affects This Country‘S Tax System In A Unique Way. Economists
Address Such Issues As How Proposed Tax Legislation Will Affect The Rate Of Inflation Or
Economic Growth. Measurement Of The Social Equity Of A Tax And Determining Whether A
Tax System Discriminates Against Certain Taxpayers Are Issues That Are Examined By
Sociologists And Political Scientists.
Finally, Attorneys Are Responsible For The Interpretation Of The Taxation Statutes, And
Accountants Ensure That These Same Statutes Are Applied Consistently.****8880()
Page 4
1-2. The Other Major Categories Of Tax Practice In Addition To Tax Research Are As Follows:
• Tax Compliance
• Tax Planning
• Tax
Litigation Page 5
1-3. Tax Compliance Consists Of Gathering Pertinent Information, Evaluating And Classifying
That Information, And Filing Any Necessary Tax Returns. Compliance Also Includes Other
Functions Necessary To Satisfy Governmental Requirements, Such As Representing A Client
During An Internal Revenue Service (Irs) Audit.
,Federal Tax Research, 13th Edition Page 1-3
Page 5
1-4. Most Of The Tax Compliance Work Is Performed By Commercial Tax Preparers, Enrolled
Agents (Eas), Attorneys, And Certified Public Accountants (Cpas). Noncomplex Individual,
Partnership, And Corporate Tax Returns Often Are Completed By Commercial Tax Preparers.
The Preparation Of More Complex Returns Usually Is Performed By Eas, Attorneys, And Cpas.
The Latter Groups Also Provide Tax Planning Services And Represent Their Clients Before
The Irs.
An Ea Is One Who Is Admitted To Practice Before The Irs By Passing A Special Irs-
Administered Examination, Or Who Has Worked For The Irs For Five Years And Is Issued A
Permit To Represent Clients Before The Irs. Cpas And Attorneys Are Not Required To Take This
Examination And Are Automatically Admitted To Practice Before The Irs If They Are In Good
Standing With The Appropriate Professional Licensing Board.
Page 5 And Circular 230
1-5. Tax Planning Is The Process Of Arranging One‘S Financial Affairs To Minimize Any Tax
Liability. Much Of Modern Tax Practice Centers Around This Process, And The Resulting
Outcome Is Tax Avoidance.
There Is Nothing Illegal Or Immoral In The Avoidance Of Taxation As Long As The Taxpayer
Remains Within Legal Bounds. In Contrast, Tax Evasion Constitutes The Illegal Nonpayment Of
A Tax And Cannot Be Condoned. Activities Of This Sort Clearly Violate Existing Legal
Constraints And Fall Outside Of The Domain Of The Professional Tax Practitioner.
Page 6
1-6. In Can Copen Ctax Cplanning Csituation, Cthe Ctransaction Cis Cnot Cyet Ccomplete; Ctherefore,
Cthe Ctax Cpractitionercmaintains Csome Cdegree Cof Ccontrol Cover Cthe Cpotential Ctax
Cliability, Cand Cthe Ctransaction Cmay Cbe Cmodi- Cfied Cto Cachieve Ca Cmore Cfavorable Ctax
Ctreatment. Cin Ca Cclosed Ctransaction Chowever, Call Cof Cthe Cpertinentcactions Chave Cbeen
Ccompleted, Cand Ctax Cplanning Cactivities Cmay Cbe Climited Cto Cthe Cpresentation Cof Cthe
Csituation Cto Cthe Cgovernment Cin Cthe Cmost Clegally Cadvantageous Cmanner Cpossible.
, Page 1-4 SOLUTIONS MANUAL
Page C6
1-7. Tax Clitigation Cis Cthe Cprocess Cof Csettling Ca Cdispute Cwith Cthe Cirs Cin Ca Ccourt Cof
Claw. Ctypically, Ca Ctaxcattorney Chandles Ctax Clitigation Cthat Cprogresses Cbeyond Cthe
Cfinal Cirs Cappeal.
Page C6
1-8. Cpas Cserve Cis Ca Csupport Ccapacity Cin Ctax Clitigation.
Page C6
1-9. Tax Cresearch Cconsists Cof Cthe Cresolution Cof Cunanswered Ctaxation Cquestions. Cthe
Ctax Cresearch Cprocesscincludes Cthe Cfollowing:
1. Identification Cof Cpertinent Cissues;
2. Specification Cof Cproper Cauthorities;
3. Evaluation Cof Cthe Cpropriety Cof Cauthorities; Cand,
4. Application Cof Cauthorities Cto Ca Cspecific Csituation.
Page C6
1-10. Circular C230 Cis Cissued Cby Cthe Ctreasury Cdepartment Cand Capplies Cto Call Cwho
Cpractice Cbefore Cthe Cirs.Cpage C7
1-11. In Caddition Cto Ccircular C230, Ccpas Cmust Cfollow Cthe Caicpa‘S Ccode Cof Cprofessional
Cconduct Cand Cstatements Con Cstandards Cfor Ctax Cservices. Ccpas Cmust Calso Cabide Cby
Cthe Crules Cof Cthe Cappropriatecstate Cboard(S) Cof Caccountancy.
Page C7
1-12. A Creturn Cpreparer Cmust Cobtain C18 Chours Cof Ccontinuing Ceducation Cfrom Can Cirs-
Approved Cce Cprovider. Cthe Chours Cmust Cinclude Ca C6 Ccredit Chour Cannual Cfederal
Ctax Crefresher Ccourse C(Aftr) Cthat Ccovers Cfiling Cseason Cissues Cand Ctax Claw Cupdates.
Cthe Caftr Ccourse Cmust Cinclude Ca Cknowledge-Cbased Ccomprehension Ctest Cadministered
Cat Cthe Cconclusion Cof Cthe Ccourse Cby Cthe Cce Cprovider.
