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Solution manual for federal tax research 12th edition by roby sawyers steven gill.pdf
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Federal6Tax6Research,612th6Editio Page61-1n
Solution6Manual6Federal6Tax6Research612th6Edition6by6Roby6Sawyers,6Steven6Gill
CHAPTER61
INTRODUCTION6TO6TAX6PRACTICE6AND6ETHICS
DISCUSSION6QUESTIONS
1-1.
In6the6United6States,6the6tax6system6is6an6outgrowth6of6the6following6five6disciplines:
6law,6accounting,6economics,6political6science,6and6sociology.6The6environment6for6the6tax6sy
stem6is6provided6by6the6principles6of6economics,6sociology,6and6political6science,6while6the6le
gal6and6accounting6fields6are6responsible6for6 the6system‘s6interpretation6 and6application.
Each6of6these6disciplines6affects6this6country‘s6tax6system6in6a6unique6way.6Economists6addre
ss6such6issues6as6how6proposed6tax6legislation6will6affect6the6rate6of6inflation6or6economic6gro
wth.6Measurement6of6the6social6equity6of6a6tax6and6determining6whether6a6tax6system6discrimi
nates6against6certain6taxpayers6are6issues6that6are6examined6by6sociologists6and6political6scien
tists.
Finally,6attorneys6are6responsible6for6the6interpretation6of6the6taxation6statutes,6and6accountant
s6ensure6that6these6same6statutes6are6applied6consistently.
Page64
1-2. The6other6major6categories6of6tax6practice6in6addition6to6tax6research6are6as6follows:
Tax6compliance
Tax6planning
Tax6litigatio
n6Page65
1-3.
Tax6compliance6consists6of6gathering6pertinent6information,6evaluating6and6classifying
6that6information,6and6filing6any6necessary6tax6returns.6Compliance6also6includes6other6functi
ons6necessary6to6satisfy6governmental6requirements,6such6as6representing6a6client6during6an6In
ternal6Revenue6Service6(IRS)6audit.
,Page61-2 SOLUTIONS6MANUAL
Page65
1-4.
Most6of6the6tax6compliance6work6is6performed6by6commercial6tax6preparers,6enrolled6
agents6(EAs),6attorneys,6and6certified6public6accountants6(CPAs).6Noncomplex6individual,6par
tnership,6and6corporate6tax6returns6often6are6completed6by6commercial6tax6preparers.6The6prep
aration6of6more6complex6returns6usually6is6performed6by6EAs,6attorneys,6and6CPAs.6The6latter
6groups6also6provide6tax6planning6services6and6represent6their6clients6before6the6IRS.
An6EA6is6one6who6is6admitted6to6practice6before6the6IRS6by6passing6a6special6IRS-
administered6examination,6or6who6has6worked6for6the6IRS6for6five6years6and6is6issued6a6permit6t
o6represent6clients6before6the6IRS.6CPAs6and6attorneys6are6not6required6to6take6this6examination6
and6are6automatically6admitted6to6practice6before6the6IRS6if6they6are6in6good6standing6with6the6a
ppropriate6professional6licensing6board.
Page656and6Circular6230
1-5.
Tax6planning6is6the6process6of6arranging6one‘s6financial6affairs6to6minimize6any6tax6liabil
ity.6Much6of6modern6tax6practice6centers6around6this6process,6and6the6resulting6outcome6is6tax6av
oidance.
There6is6nothing6illegal6or6immoral6in6the6avoidance6of6taxation6as6long6as6the6taxpayer6remains6
within6legal6bounds.6In6contrast,6tax6evasion6constitutes6the6illegal6nonpayment6of6a6tax6and6cann
ot6be6condoned.6Activities6of6this6sort6clearly6violate6existing6legal6constraints6and6fall6outside6of6
the6domain6of6the6professional6tax6practitioner.
Page66
1-6.
In6an6open6tax6planning6situation,6the6transaction6is6not6yet6complete;6therefore,6the6tax6p
ractitioner6maintains6some6degree6of6control6over6the6potential6tax6liability,6and6the6transaction6m
ay6be6modi-
6fied6to6achieve6a6more6favorable6tax6treatment.6In6a6closed6transaction6however,6all6of6the6pertin
ent6actions6have6been6completed,6and6tax6planning6activities6may6be6limited6to6the6presentation6of
6the6situation6to6the6government6in6the6most6legally6advantageous6 manner6 possible.
,Federal6Tax6Research,612th6Editio Page61-3
n
Page66
1-7.
Tax6litigation6is6the6process6of6settling6a6dispute6with6the6IRS6in6a6court6of6law.6Typic
ally,6a6tax6attorney6handles6tax6litigation6that6progresses6beyond6the6final6IRS6appeal.
Page66
1-8. CPAs6serve6is6a6support6capacity6in6tax6litigation.
Page66
1-9.
Tax6research6consists6of6the6resolution6of6unanswered6taxation6questions.6 The6tax6researc
h6process6includes6the6following:
1. Identification6of6pertinent6issues;
2. Specification6of6proper6authorities;
3. Evaluation6of6the6propriety6of6authorities;6and,
4. Application6of6authorities6to6a6specific6situation.
Page66
1-10.
Circular62306is6issued6by6the6Treasury6Department6and6applies6to6all6who6practice6befor
e6the6IRS.6Page67
1-11.
In6addition6to6Circular6230,6CPAs6must6follow6the6AICPA‘s6Code6of6Professional6Co
nduct6and6Statements6on6Standards6for6Tax6Services.6CPAs6must6also6abide6by6the6rules6of6th
e6appropriate6state6board(s)6of6accountancy.
Page67
1-12. A6return6preparer6must6obtain6186hours6of6continuing6education6from6an6IRS-
approved6CE6Provider.6The6hours6must6include6a666credit6hour6Annual6Federal6Tax6Refresher6co
urse6(AFTR)6that6covers6filing6season6issues6and6tax6law6updates.6The6AFTR6course6must6includ
e6a6knowledge-
, Page61-4 SOLUTIONS6MANUAL
based6comprehension6test6administered6at6the6conclusion6 of6the6course6by6the6CE6Provider.
6
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