FederalVTaxVResearch,V12thVEditi PageV1
on
ResearchVCaseVSolutions
TheVsolutionsVtoVtheVresearchVcasesVareVvalidVasVofVFebruaryV2020.VItVisVlikelyVthatVthereV
willVbeVchangesVinVtheVcode,Vregulations,VadministrativeVpronouncements,VandVcaseVlawVaft
erVthisVmanualVisVpublished.VFurther,VitVisVlikelyVthatVtheVservicesVavailableVtoVtheVstudents
VwillVnotVbeVidenticalVtoVthoseVavailableVtoVtheVauthorsVofVthisVmanual.VAllVpossibleVcitatio
nsVareVnotVprovided;VonlyVaVsampleVofVtheVcitationsVmostVlikelyVprovidedVbyVstudentsVisVpr
esented.VConsequently,VtheVstudents‘VresponsesVmayVvaryVfromVthoseVlistedVforVeachVquesti
on.
ChapterV1
Note:VForVtheVfollowingVcases,VstudentsVmayVpresentVotherVpositions,VwhichVcouldVbeVcon
sideredVethicallyVcorrect.VTheVanswersVpresentedVbelowVareVtheVviewsVofVtheVauthorsVandV
areVpresentedVasVaVbasisVtoVjudgeVaVstudent‘sVethicalVconclusion:
1-1
AICPAVCodeVofVProfessionalVC
onductVETV§V1.200.001:VIndepende
nce
ETV§V1.100.001:VObjectivityVandVIntegrity
ETV§V1.700.001:VConfidentialVClientVInformatio
nVETV§V1.400.001:VActsVDiscreditable
SSTSV V No.V1:VTaxVReturnVPositions
ItVisVnotVadvisableVforVAhiVCorporationVtoVcompleteVtheVtransaction.VUnderV
ETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVshouldVbeVrenderedVwit
hVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexistingVconflictsVofVin
terest.VTheVCPAVmustVexerciseVdueVprofessionalVcareVinVtheVperformanceVofV
allVprofessionalVservicesVandVcomplyVwithVallVstandardsVpromulgatedVbyVtheV
bodiesVdesignatedVbyVtheVAICPAVCouncil.VUnderVETV§1.400.001,VaVCPAVm
ustVnotVcommitVanVactVthatVisVdiscreditableVtoVtheVprofession.VUnderVtheVStat
ementsVofVStandardsVforVTax
,FederalVTaxVResearch,V12thVEditi PageV2
on
ServicesV(SSTS),VaVCPAVshouldVhaveVaVgood-
faithVbeliefVthatVaVrecommendedVpositionVhasVaVrealisticVpossibilityVofVbeingV
sustainedVifVchallenged.
TheVCPAVmustVuseVjudgmentVthatVreflectsVprofessionalVcompetenceVandVserv
esVtheVclient‘sVneeds.VWrittenVcommunicationVshouldVbeVgivenVtoVtheVclientVi
nVimportant,Vunusual,VorVcomplicatedVtransactions.VTheVCPAVshouldVadviseVt
heVclientVofVsuchVrisksVasVinVtheVinstantVcase.VWhereVtheVtaxpayerVinsistsVon
VtheVspecificVposition,VtheVCPAVshouldVnotVcontinueVwithVtheVengagementVas
VtheVtaxVreturnVpositionVisVexploitativeVandVfrivolous.
1-2.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrity
SSTSV No.V1:VTaxVReturnVPositions;VNo.V6:VKnowledgeVofVError:VReturnVPre
parationVandVAdministrativeVProceedings
AVCPAVmustVcomplyVwithVallVstandardsVpromulgatedVbyVbodiesVdesignatedV
byVtheVAICPAVCouncilVandVconformVtoVgenerallyVacceptedVaccountingVprinci
ples.VUnderVETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVshouldVbeV
renderedVwithVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexistingVco
nflictsVofVinterest.VInVaddition,VaVCPAVshouldVneitherVknowinglyVmisrepresent
VfactsVnorVsubordinateVhisVorVherVjudgmentVtoVthatVofVothersVinVrenderingVan
yVprofessionalVservices.
UnderVtheVStatementsVofVStandardsVforVTaxVServicesV(SSTS),VaVCPAVshould
VhaveVaVgood-
faithVbeliefVthatVaVrecommendedVpositionVhasVaVrealisticVpossibilityVofVbeing
VsustainedVifVchallenged.VInVtheVinstantVcase,VtheVCPAVmustVnotifyVandVadvi
seVtheVclientVpromptlyVuponVhisVorVherVknowledgeVofVaVpriorVorVcurrentVtax
VreturnVerror(s)VthatVhasVaVsignificantVeffectVuponVtheVtaxpayer‘sVliability.VTh
,FederalVTaxVResearch,V12thVEditi PageV3
on
eVclientVmustVbeVnotifiedVandVadvisedVeitherVorallyVorVinVwriting.VOnceVrent
alVpricesVofVtheVcurrentVareaVhaveVbeenVverifiedVandVcomparedVagainstVtheVa
mountVpaidVbyVHaddockVCorporation,VtheVCPAVshouldVtakeVtheVappropriateV
actions.VTheVCPAVshould
, FederalVTaxVResearch,V12thVEditi PageV4
on
considerVwhetherVtoVproceedVwithVtheVpreparationVofVtheVcurrentVyear‘sVretur
nVorVresignVfromVtheVengagementVcompletely.VHeVorVsheVshouldVnotVsignVthe
VtaxVreturnVuntilVtheVappropriateVmeasuresVhaveVbeenVtakenVtoVcorrectVtheVer
rorsVmadeVinVtheVcurrentVandVpriorVreturns.
1-3.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrity
ETV§V1.700.001:VConfidentialVClientVInformation
UnderVETV§V1.700.001VofVtheVAICPAVCodeVofVProfessionalVConduct,VaVCPA
VinVtheVpracticeVofVpublicVaccountingVmustVnotVdiscloseVconfidentialVclientVd
ataVwithoutVspecificVconsentVofVtheVclient.VThereVareVexceptionsVthatVexistVfo
rVRuleV301.VUnderVETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVsho
uldVbeVrenderedVwithVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexis
tingVconflictsVofVinterest.VInVaddition,VaVCPAVshouldVneitherVknowinglyVmisr
epresentVfactsVnorVsubordinateVhisVorVherVjudgmentVtoVthatVofVothersVinVrend
eringVanyVprofessionalVservices.
InVtheVinstantVcase,VtheVCPAVshouldVnotifyVtheVclient,VSharkVCorporation,Vof
VtheVmisrepresentationVofVfacts.VIfVtheVclientVisVnotVwillingVtoVnotifyVtheVbuy
erVofVtheVbuilding‘sVcurrentVstructuralVcondition,VtheVCPAVshouldVresignVfro
mVtheVengagement.VIfVtheVCPAVhasValreadyVtoldVtheVotherVsideVthatVtheVbuil
dingVwasVOKVwhenVheVorVsheVlearnsVofVitsVstatus,VtheVCPAVshouldVresignVfr
omVtheVengagementVwithVSharkVCorporation.
1-4.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrityVETV§V1.300.001VGeneralVStan
dards
ETV§V1.700.001:VConfidentialVClientVInformation
on
ResearchVCaseVSolutions
TheVsolutionsVtoVtheVresearchVcasesVareVvalidVasVofVFebruaryV2020.VItVisVlikelyVthatVthereV
willVbeVchangesVinVtheVcode,Vregulations,VadministrativeVpronouncements,VandVcaseVlawVaft
erVthisVmanualVisVpublished.VFurther,VitVisVlikelyVthatVtheVservicesVavailableVtoVtheVstudents
VwillVnotVbeVidenticalVtoVthoseVavailableVtoVtheVauthorsVofVthisVmanual.VAllVpossibleVcitatio
nsVareVnotVprovided;VonlyVaVsampleVofVtheVcitationsVmostVlikelyVprovidedVbyVstudentsVisVpr
esented.VConsequently,VtheVstudents‘VresponsesVmayVvaryVfromVthoseVlistedVforVeachVquesti
on.
ChapterV1
Note:VForVtheVfollowingVcases,VstudentsVmayVpresentVotherVpositions,VwhichVcouldVbeVcon
sideredVethicallyVcorrect.VTheVanswersVpresentedVbelowVareVtheVviewsVofVtheVauthorsVandV
areVpresentedVasVaVbasisVtoVjudgeVaVstudent‘sVethicalVconclusion:
1-1
AICPAVCodeVofVProfessionalVC
onductVETV§V1.200.001:VIndepende
nce
ETV§V1.100.001:VObjectivityVandVIntegrity
ETV§V1.700.001:VConfidentialVClientVInformatio
nVETV§V1.400.001:VActsVDiscreditable
SSTSV V No.V1:VTaxVReturnVPositions
ItVisVnotVadvisableVforVAhiVCorporationVtoVcompleteVtheVtransaction.VUnderV
ETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVshouldVbeVrenderedVwit
hVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexistingVconflictsVofVin
terest.VTheVCPAVmustVexerciseVdueVprofessionalVcareVinVtheVperformanceVofV
allVprofessionalVservicesVandVcomplyVwithVallVstandardsVpromulgatedVbyVtheV
bodiesVdesignatedVbyVtheVAICPAVCouncil.VUnderVETV§1.400.001,VaVCPAVm
ustVnotVcommitVanVactVthatVisVdiscreditableVtoVtheVprofession.VUnderVtheVStat
ementsVofVStandardsVforVTax
,FederalVTaxVResearch,V12thVEditi PageV2
on
ServicesV(SSTS),VaVCPAVshouldVhaveVaVgood-
faithVbeliefVthatVaVrecommendedVpositionVhasVaVrealisticVpossibilityVofVbeingV
sustainedVifVchallenged.
TheVCPAVmustVuseVjudgmentVthatVreflectsVprofessionalVcompetenceVandVserv
esVtheVclient‘sVneeds.VWrittenVcommunicationVshouldVbeVgivenVtoVtheVclientVi
nVimportant,Vunusual,VorVcomplicatedVtransactions.VTheVCPAVshouldVadviseVt
heVclientVofVsuchVrisksVasVinVtheVinstantVcase.VWhereVtheVtaxpayerVinsistsVon
VtheVspecificVposition,VtheVCPAVshouldVnotVcontinueVwithVtheVengagementVas
VtheVtaxVreturnVpositionVisVexploitativeVandVfrivolous.
1-2.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrity
SSTSV No.V1:VTaxVReturnVPositions;VNo.V6:VKnowledgeVofVError:VReturnVPre
parationVandVAdministrativeVProceedings
AVCPAVmustVcomplyVwithVallVstandardsVpromulgatedVbyVbodiesVdesignatedV
byVtheVAICPAVCouncilVandVconformVtoVgenerallyVacceptedVaccountingVprinci
ples.VUnderVETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVshouldVbeV
renderedVwithVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexistingVco
nflictsVofVinterest.VInVaddition,VaVCPAVshouldVneitherVknowinglyVmisrepresent
VfactsVnorVsubordinateVhisVorVherVjudgmentVtoVthatVofVothersVinVrenderingVan
yVprofessionalVservices.
UnderVtheVStatementsVofVStandardsVforVTaxVServicesV(SSTS),VaVCPAVshould
VhaveVaVgood-
faithVbeliefVthatVaVrecommendedVpositionVhasVaVrealisticVpossibilityVofVbeing
VsustainedVifVchallenged.VInVtheVinstantVcase,VtheVCPAVmustVnotifyVandVadvi
seVtheVclientVpromptlyVuponVhisVorVherVknowledgeVofVaVpriorVorVcurrentVtax
VreturnVerror(s)VthatVhasVaVsignificantVeffectVuponVtheVtaxpayer‘sVliability.VTh
,FederalVTaxVResearch,V12thVEditi PageV3
on
eVclientVmustVbeVnotifiedVandVadvisedVeitherVorallyVorVinVwriting.VOnceVrent
alVpricesVofVtheVcurrentVareaVhaveVbeenVverifiedVandVcomparedVagainstVtheVa
mountVpaidVbyVHaddockVCorporation,VtheVCPAVshouldVtakeVtheVappropriateV
actions.VTheVCPAVshould
, FederalVTaxVResearch,V12thVEditi PageV4
on
considerVwhetherVtoVproceedVwithVtheVpreparationVofVtheVcurrentVyear‘sVretur
nVorVresignVfromVtheVengagementVcompletely.VHeVorVsheVshouldVnotVsignVthe
VtaxVreturnVuntilVtheVappropriateVmeasuresVhaveVbeenVtakenVtoVcorrectVtheVer
rorsVmadeVinVtheVcurrentVandVpriorVreturns.
1-3.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrity
ETV§V1.700.001:VConfidentialVClientVInformation
UnderVETV§V1.700.001VofVtheVAICPAVCodeVofVProfessionalVConduct,VaVCPA
VinVtheVpracticeVofVpublicVaccountingVmustVnotVdiscloseVconfidentialVclientVd
ataVwithoutVspecificVconsentVofVtheVclient.VThereVareVexceptionsVthatVexistVfo
rVRuleV301.VUnderVETV§V1.100.001,VallVprofessionalVservicesVbyVaVCPAVsho
uldVbeVrenderedVwithVobjectivityVandVintegrity,VavoidingVanyVpotentialVorVexis
tingVconflictsVofVinterest.VInVaddition,VaVCPAVshouldVneitherVknowinglyVmisr
epresentVfactsVnorVsubordinateVhisVorVherVjudgmentVtoVthatVofVothersVinVrend
eringVanyVprofessionalVservices.
InVtheVinstantVcase,VtheVCPAVshouldVnotifyVtheVclient,VSharkVCorporation,Vof
VtheVmisrepresentationVofVfacts.VIfVtheVclientVisVnotVwillingVtoVnotifyVtheVbuy
erVofVtheVbuilding‘sVcurrentVstructuralVcondition,VtheVCPAVshouldVresignVfro
mVtheVengagement.VIfVtheVCPAVhasValreadyVtoldVtheVotherVsideVthatVtheVbuil
dingVwasVOKVwhenVheVorVsheVlearnsVofVitsVstatus,VtheVCPAVshouldVresignVfr
omVtheVengagementVwithVSharkVCorporation.
1-4.
AICPAVCodeVofVProfessionalVCond
uctV ETV§V1.100.001:VObjectivityVandVI
ntegrityVETV§V1.300.001VGeneralVStan
dards
ETV§V1.700.001:VConfidentialVClientVInformation
