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Solution Manual Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill
M M M M M M M M M M M
CHAPTER 1 M
INTRODUCTION TO TAX PRACTICE AND ETHICS
M M M M M
DISCUSSIONMQUESTIONS
1-1.
InMtheMUnitedMStates,MtheMtaxMsystemMisManMoutgrowthMofMtheMfollowingMfiveMdiscipl
ines:Mlaw,Maccounting,Meconomics,MpoliticalMscience,MandMsociology.MTheMenvironmentMforMt
heMtaxMsystemMisMprovidedMbyMtheMprinciplesMofMeconomics,Msociology,MandMpoliticalMscienc
e,MwhileMtheMlegalMandMaccountingMfieldsMareMresponsibleMforM theMsystem‘sMinterpretationM an
dMapplication.
EachMofMtheseMdisciplinesMaffectsMthisMcountry‘sMtaxMsystemMinMaMuniqueMway.MEconomistsM
addressMsuchMissuesMasMhowMproposedMtaxMlegislationMwillMaffectMtheMrateMofMinflationMorMeco
nomicMgrowth.MMeasurementMofMtheMsocialMequityMofMaMtaxMandMdeterminingMwhetherMaMtaxM
systemMdiscriminatesMagainstMcertainMtaxpayersMareMissuesMthatMareMexaminedMbyMsociologist
sMandMpoliticalMscientists.
Finally,MattorneysMareMresponsibleMforMtheMinterpretationMofMtheMtaxationMstatutes,MandMaccou
ntantsMensureMthatMtheseMsameMstatutesMareMappliedMconsistently.
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1-2. TheMotherMmajorMcategoriesMofMtaxMpracticeMinMadditionMtoMtaxMresearchMareMasMfollows:
TaxMcompliance
TaxMplanning
TaxMlitigatio
nMPageM5
1-3.
TaxMcomplianceMconsistsMofMgatheringMpertinentMinformation,MevaluatingMandMclassif
yingMthatMinformation,MandMfilingManyMnecessaryMtaxMreturns.MComplianceMalsoMincludesMoth
erMfunctionsMnecessaryMtoMsatisfyMgovernmentalMrequirements,MsuchMasMrepresentingMaMclient
,PageM1-2 SOLUTIONSMMANUA
duringManMInternalMRevenueMServiceM(IRS)Maudit.
M L
,FederalMTaxMResearch,M12thMEditi PageM1-3
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PageM5
1-4.
MostMofMtheMtaxMcomplianceMworkMisMperformedMbyMcommercialMtaxMpreparers,Menrol
ledMagentsM(EAs),Mattorneys,MandMcertifiedMpublicMaccountantsM(CPAs).MNoncomplexMindivid
ual,Mpartnership,MandMcorporateMtaxMreturnsMoftenMareMcompletedMbyMcommercialMtaxMpreparer
s.MTheMpreparationMofMmoreMcomplexMreturnsMusuallyMisMperformedMbyMEAs,Mattorneys,MandM
CPAs.MTheMlatterMgroupsMalsoMprovideMtaxMplanningMservicesMandMrepresentMtheirMclientsMbefo
reMtheMIRS.
AnMEAMisMoneMwhoMisMadmittedMtoMpracticeMbeforeMtheMIRSMbyMpassingMaMspecialMIRS-
administeredMexamination,MorMwhoMhasMworkedMforMtheMIRSMforMfiveMyearsMandMisMissuedMaMpe
rmitMtoMrepresentMclientsMbeforeMtheMIRS.MCPAsMandMattorneysMareMnotMrequiredMtoMtakeMthisMe
xaminationMandMareMautomaticallyMadmittedMtoMpracticeMbeforeMtheMIRSMifMtheyMareMinMgoodMst
andingMwithMtheMappropriateMprofessionalMlicensingMboard.
PageM5MandMCircularM230
1-5.
TaxMplanningMisMtheMprocessMofMarrangingMone‘sMfinancialMaffairsMtoMminimizeManyMtaxM
liability.MMuchMofMmodernMtaxMpracticeMcentersMaroundMthisMprocess,MandMtheMresultingMoutcome
MisMtaxMavoidance.
ThereMisMnothingMillegalMorMimmoralMinMtheMavoidanceMofMtaxationMasMlongMasMtheMtaxpayerMre
mainsMwithinMlegalMbounds.MInMcontrast,MtaxMevasionMconstitutesMtheMillegalMnonpaymentMofMaMt
axMandMcannotMbeMcondoned.MActivitiesMofMthisMsortMclearlyMviolateMexistingMlegalMconstraintsMa
ndMfallMoutsideMofMtheMdomainMofMtheMprofessionalMtaxMpractitioner.
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1-6.
InManMopenMtaxMplanningMsituation,MtheMtransactionMisMnotMyetMcomplete;Mtherefore,MtheM
taxMpractitionerMmaintainsMsomeMdegreeMofMcontrolMoverMtheMpotentialMtaxMliability,MandMtheMtran
sactionMmayMbeMmodi-
MfiedMtoMachieveMaMmoreMfavorableMtaxMtreatment.MInMaMclosedMtransactionMhowever,MallMofMtheM
pertinentMactionsMhaveMbeenMcompleted,MandMtaxMplanningMactivitiesMmayMbeMlimitedMtoMtheMpres
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L M mannerM possibl
entationMofMtheMsituationMtoMtheMgovernmentMinMtheMmostMlegallyMadvantageous
e.