Exam 14: Duties of Tax Professionals

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:

Free

(Multiple Choice)

5.0/5

(83)

Question 1

Correct Answer:

Verified

Should tax return preparers have a duty to verify the information provided to them by clients? Why or why not?

Free

(Essay)

4.9/5

(83)

Question 2

Correct Answer:

Answered by Examlex AI Copilot

Yes, tax return preparers should have a duty to verify the information provided to them by clients. This is because tax return preparers are responsible for accurately preparing and filing tax returns on behalf of their clients. Verifying the information provided by clients helps to ensure that the tax returns are accurate and compliant with tax laws.

Additionally, tax return preparers have a professional and ethical responsibility to ensure the accuracy of the information they use to prepare tax returns. By verifying the information provided by clients, tax return preparers can help prevent errors, omissions, or potential tax fraud.

Furthermore, verifying client-provided information can also protect the tax return preparer from potential legal and professional consequences. If a tax return preparer blindly accepts and uses inaccurate information provided by a client, they could be held liable for any resulting errors or noncompliance.

In conclusion, having a duty to verify the information provided by clients is essential for tax return preparers to fulfill their professional responsibilities, ensure accurate tax returns, and protect themselves from potential legal and professional risks.

If a tax return preparer informs a taxpayer that an error exists in a tax return previously filed by the taxpayer, the taxpayer has:

Free

(Multiple Choice)

4.7/5

(77)

Question 3

Correct Answer:

Verified

What are a tax return preparer's duties, if any, upon discovering an error in a tax return that previously was submitted by a client to a taxing authority?

(Short Answer)

4.8/5

(80)

Question 4

The "reasonable possibility of success" standard commonly is associated with "1 out of 3" odds of success. These odds refer to the likelihood of success:

(Multiple Choice)

4.7/5

(74)

Question 5

The use of estimates on a tax return generally is:

(Multiple Choice)

4.9/5

(98)

Question 6

Before recommending a tax position that meets the "substantial authority" standard, a tax return preparer should make sure that:

(Multiple Choice)

4.8/5

(83)

Question 7

Preparing a client's tax return solely based on what the client has represented to you about his income and expenses generally is:

(Multiple Choice)

4.9/5

(66)

Question 8

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?

(Essay)

5.0/5

(84)

Question 9

A taxpayer wishes to assert a tax position concerning the deductibility of mortgage interest on a home that is partially used for business and partially used as a vacation home. This tax position satisfies the "substantial authority" standard. This taxpayer ordinarily may assert this tax position:

(Multiple Choice)

4.9/5

(81)

Question 10

What are some of the ethical duties that apply to accounting professionals engaged in tax planning?

(Short Answer)

4.8/5

(67)

Question 11

Should a tax return preparer solely be an advocate for a client?

(Essay)

4.8/5

(92)

Question 12

Your client claimed seven children as dependency exemptions on his tax return last year. You now have learned that the client only has three children, of which only two qualify as dependents. You have advised your client to amend his prior-year tax return to correct for this error, but your client has refused to do so. However, your client has agreed to only claim the proper number of dependency exemptions during the current and future years. You:

(Multiple Choice)

4.9/5

(76)

Question 13

A taxpayer wishes to assert a tax position concerning the deductibility of a "special-purpose uniform" that she wears to work and never wears outside the workplace. The tax position satisfies the "reasonable possibility of success" standard. This taxpayer ordinarily may:

(Multiple Choice)

4.8/5

(74)

Question 14

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:

(Multiple Choice)

4.7/5

(81)

Question 15

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?

(Multiple Choice)

4.8/5

(75)

Question 16

In asserting a tax position, the reporting standard that customarily is applied is that the position is supported in the law:

(Multiple Choice)

4.7/5

(101)

Question 17

What are some of the ethical duties that apply to tax return preparers?

(Short Answer)

4.8/5

(89)

Question 18

The use of estimates on a tax return should be prominently disclosed on the face of the tax return if:

(Multiple Choice)

4.7/5

(72)

Question 19

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:

(Multiple Choice)

4.8/5

(82)

Question 20

Showing 1 - 20 of 37

Should tax return preparers have a duty to verify the information provided to them by clients? Why or why not?

If a tax return preparer informs a taxpayer that an error exists in a tax return previously filed by the taxpayer, the taxpayer has:

What are a tax return preparer's duties, if any, upon discovering an error in a tax return that previously was submitted by a client to a taxing authority?

The "reasonable possibility of success" standard commonly is associated with "1 out of 3" odds of success. These odds refer to the likelihood of success:

The use of estimates on a tax return generally is:

Before recommending a tax position that meets the "substantial authority" standard, a tax return preparer should make sure that:

Preparing a client's tax return solely based on what the client has represented to you about his income and expenses generally is:

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?

A taxpayer wishes to assert a tax position concerning the deductibility of mortgage interest on a home that is partially used for business and partially used as a vacation home. This tax position satisfies the "substantial authority" standard. This taxpayer ordinarily may assert this tax position:

What are some of the ethical duties that apply to accounting professionals engaged in tax planning?

Should a tax return preparer solely be an advocate for a client?

A taxpayer wishes to assert a tax position concerning the deductibility of a "special-purpose uniform" that she wears to work and never wears outside the workplace. The tax position satisfies the "reasonable possibility of success" standard. This taxpayer ordinarily may:

In asserting a tax position, the reporting standard that customarily is applied is that the position is supported in the law:

What are some of the ethical duties that apply to tax return preparers?

The use of estimates on a tax return should be prominently disclosed on the face of the tax return if:

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:

Introduction to Ethics

Ethical Principles and Reasoning

The Core Philosophies

Virtue, Justice, and Social Responsibility

Why We Cheat

Greed, Corruption, and Collusion

Fraud and Earnings Management

Discreditable Acts: Discrimination, Deceit, and Disclosure

Confidentiality

Independence and Moral Seduction

Conflicts of Interest

Duties As a Whistleblower

Duties of Public-Company Auditors: the Sarbanesoxley Act

Duties of Fiduciaries: Financial Planners, Trustees, and Executors

Duties in the Accounting Workplace Online Only

Filters