Chat with AIExam 14: Duties of Tax Professionals
A taxpayer ordinarily should not assert a tax position unless it is supported by a reasonable possibility of success." This standard commonly is referred to as requiring a certain probability of acceptance or approval if the position is detected and challenged by the taxing authority.What is the associated probability of success?
(74) 
VerifiedB
A taxpayer wishes to assert a tax position concerning the deductibility of data communication service on a mobile wireless device that is partially used for business and partially used for personal activities.This tax position satisfies the "substantial authority" standard.Two federal district courts issued decisions that denied taxpayers a deduction for these costs,but the U.S.Supreme Court issued a later decision that allowed a taxpayer a deduction for these costs.The taxpayer may:
(78) VerifiedD
If tax return preparers were permitted to solely act as advocates for their clients' interests,without regard to the public interest,what would be the consequences?
(77) 
Answered by Examlex AI CopilotIf tax return preparers were permitted to solely act as advocates for their clients' interests, without regard to the public interest, there would be several potential consequences.
Firstly, there could be an increase in fraudulent or unethical behavior by tax preparers. Without a requirement to consider the public interest, preparers may be more inclined to engage in practices that prioritize their clients' financial gain over accurate and honest tax reporting. This could lead to an overall decrease in tax compliance and an increase in tax evasion.
Additionally, allowing tax preparers to solely advocate for their clients could undermine the integrity of the tax system. Tax laws are designed to balance the interests of individual taxpayers with the needs of the public as a whole. Allowing preparers to disregard the public interest could result in a system that is less fair and equitable for all taxpayers.
Furthermore, there could be negative consequences for government revenue. If tax preparers prioritize their clients' interests without considering the broader impact on public funds, it could result in a loss of tax revenue for essential public services and programs.
Overall, permitting tax return preparers to solely act as advocates for their clients' interests, without regard to the public interest, could lead to increased fraud, a compromised tax system, and a negative impact on government revenue. It is important for tax preparers to consider both their clients' interests and the public interest in order to maintain the integrity and fairness of the tax system.
In reviewing your corporate client's tax return for last year,you discovered that it overstated the beginning balance of its Patent account by $15 million.The client amortizes patents over a15-year period on a straight-line basis,so the company's pretax income was understated by $1 million last year.You informed your client over this error,and the client acknowledged that an error had been made.Nonetheless,your client insists that,for tax purposes,it intends to continue to amortize this patent balance in the same manner and for the same amounts as it did last year.You have a duty to:
(79) A taxpayer is a licensed contractor who repairs defective electrical wiring in building elevators.She wishes to assert a tax position concerning the deductibility of depreciation expense on a home garage where she stores tools used in conducting her profession.Her tax position satisfies the "reasonable basis" standard.This taxpayer ordinarily may:
(83) A tax return preparer may prepare a tax return solely based on information furnished by a client:
(83) A taxpayer ordinarily should not assert a tax position unless it is supported by "substantial authority." This standard commonly is referred to as requiring a certain probability of acceptance or approval if the position is detected and challenged by the taxing authority.What is the associated probability of success?
(93) What are some of the practical problems associated with applying the tax reporting standards,such as the "reasonable basis" standard?
(85) A taxpayer ordinarily should not assert a tax position unless it is supported by a "reasonable basis." This standard commonly is referred to as requiring a certain probability of acceptance or approval if the position is detected and challenged by the taxing authority.What is the associated probability of success?
(64) Before recommending a tax position that meets the "substantial authority" standard,a tax return preparer should make sure that:
(80) When must a tax return preparer refrain from claiming estimated deductions on a client's tax return?
(88) A taxpayer is willing to make a clear disclosure to the IRS on the face of his tax return that he is claiming a questionable tax return deduction.Ordinarily,the taxpayer may:
(83) A client wants to claim a dubious tax deduction,but the client's deduction does is not "more likely than not" to be approved of,if detected and challenged by the IRS.What options are available to this client?
(68) Preparing a client's tax return solely based on what the client has represented to you about his income and expenses generally is:
(71) A paid tax return preparer estimated a client's charitable contributions based on the taxpayer's statement that she "donates $20 cash every week to her church" and she "attends church weekly,without fail." Upon audit,the IRS discovered that this taxpayer never attends church and never made any charitable contributions.This tax return preparer is:
(79) When does "substantial authority" exist for a tax return position?
(81) If tax return preparers were required to solely act in the public interest rather than serve as advocates for their clients' interests,what would be the consequences?
(86) In asserting a tax position,the reporting standard that customarily is applied is that the position is supported in the law:
(67) A client filed its tax return last year using the services of Teri Yakim,an Enrolled Agent.For the current year,this client has retained you to serve as her tax return preparer.You have noted that last year's tax return contained a material error.You have a duty to:
(80) 
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