Federal Tax Research, 13th Edition Page 1-1
TEST BANKkp
kp Federal Tax Research
kp kp
kp 13th Edition by Roby Sawyers, Steven Gill Chapters 1 -13
kp kp kp kp kp kp kp kp kp
,Page 1-2 SOLUTIONS MANUAL
CHAPTER 1 kp
INTRODUCTION TO TAX PRACTICE AND ETHICS
kp kp kp kp kp
DISCUSSIONkpQUESTIONS
1-1.
InkpthekpUnitedkpStates,kpthekptaxkpsystemkpiskpankpoutgrowthkpofkpthekpfollowingkpfivekpdisci
plines:kplaw,kpaccounting,kpeconomics,kppoliticalkpscience,kpandkpsociology.kpThekpenvironmentkpf
orkpthekptaxkpsystemkpiskpprovidedkpbykpthekpprincipleskpofkpeconomics,kpsociology,kpandkppoliticalkps
cience,kpwhilekpthekplegalkpandkpaccountingkpfieldskparekpresponsiblekpforkp thekpsystem‘skpinterpretat
ionkp andkpapplication.
Eachkpofkpthesekpdisciplineskpaffectskpthiskpcountry‘skptaxkpsystemkpinkpakpuniquekpway.kpEconomists
addresskpsuchkpissueskpaskphowkpproposedkptaxkplegislationkpwillkpaffectkpthekpratekpofkpinflationkporkpe
kp
conomickpgrowth.kpMeasurementkpofkpthekpsocialkpequitykpofkpakptaxkpandkpdeterminingkpwhetherkpakpt
axkpsystemkpdiscriminateskpagainstkpcertainkptaxpayerskparekpissueskpthatkparekpexaminedkpbykpsociol
ogistskpandkppoliticalkpscientists.
Finally,kpattorneyskparekpresponsiblekpforkpthekpinterpretationkpofkpthekptaxationkpstatutes,kpandkpacco
untantskpensurekpthatkpthesekpsamekpstatuteskparekpappliedkpconsistently.****8880()
Pagekp4
1-2. Thekpotherkpmajorkpcategorieskpofkptaxkppracticekpinkpadditionkptokptaxkpresearchkparekpaskpfollows:
• Taxkpcompliance
• Taxkpplanning
• Taxkplitigatio
nkpPagekp5
1-3.
Taxkpcompliancekpconsistskpofkpgatheringkppertinentkpinformation,kpevaluatingkpandkpclassif
yingkpthatkpinformation,kpandkpfilingkpanykpnecessarykptaxkpreturns.kpCompliancekpalsokpincludeskpot
herkpfunctionskpnecessarykptokpsatisfykpgovernmentalkprequirements,kpsuchkpaskprepresentingkpakpcli
entkpduringkpankpInternalkpRevenuekpServicekp(IRS)kpaudit.
,Federal Tax Research, 13th Edition Page 1-3
Pagekp5
1-4.
Mostkpofkpthekptaxkpcompliancekpworkkpiskpperformedkpbykpcommercialkptaxkppreparers,kpenr
olledkpagentskp(EAs),kpattorneys,kpandkpcertifiedkppublickpaccountantskp(CPAs).kpNoncomplexkpindi
vidual,kppartnership,kpandkpcorporatekptaxkpreturnskpoftenkparekpcompletedkpbykpcommercialkptaxkppre
parers.kpThekppreparationkpofkpmorekpcomplexkpreturnskpusuallykpiskpperformedkpbykpEAs,kpattorneys
,kpandkpCPAs.kpThekplatterkpgroupskpalsokpprovidekptaxkpplanningkpserviceskpandkprepresentkptheirkpclie
ntskpbeforekpthekpIRS.
AnkpEAkpiskponekpwhokpiskpadmittedkptokppracticekpbeforekpthekpIRSkpbykppassingkpakpspecialkpIRS-
administeredkpexamination,kporkpwhokphaskpworkedkpforkpthekpIRSkpforkpfivekpyearskpandkpiskpissuedkpakp
permitkptokprepresentkpclientskpbeforekpthekpIRS.kpCPAskpandkpattorneyskparekpnotkprequiredkptokptakekpth
iskpexaminationkpandkparekpautomaticallykpadmittedkptokppracticekpbeforekpthekpIRSkpifkptheykparekpinkpgo
odkpstandingkpwithkpthekpappropriatekpprofessionalkplicensingkpboard.
Pagekp5kpandkpCircularkp230
1-5.
Taxkpplanningkpiskpthekpprocesskpofkparrangingkpone‘skpfinancialkpaffairskptokpminimizekpanykpta
xkpliability.kpMuchkpofkpmodernkptaxkppracticekpcenterskparoundkpthiskpprocess,kpandkpthekpresultingkpoutco
mekpiskptaxkpavoidance.
Therekpiskpnothingkpillegalkporkpimmoralkpinkpthekpavoidancekpofkptaxationkpaskplongkpaskpthekptaxpayerkpr
emainskpwithinkplegalkpbounds.kpInkpcontrast,kptaxkpevasionkpconstituteskpthekpillegalkpnonpaymentkpofkp
akptaxkpandkpcannotkpbekpcondoned.kpActivitieskpofkpthiskpsortkpclearlykpviolatekpexistingkplegalkpconstraint
skpandkpfallkpoutsidekpofkpthekpdomainkpofkpthekpprofessionalkptaxkppractitioner.
Pagekp6
1-6.
Inkpankpopenkptaxkpplanningkpsituation,kpthekptransactionkpiskpnotkpyetkpcomplete;kptherefore,kpthe
taxkppractitionerkpmaintainskpsomekpdegreekpofkpcontrolkpoverkpthekppotentialkptaxkpliability,kpandkpthekpt
kp
ransactionkpmaykpbekpmodi-
fiedkptokpachievekpakpmorekpfavorablekptaxkptreatment.kpInkpakpclosedkptransactionkphowever,kpallkpofkpth
kp
ekppertinentkpactionskphavekpbeenkpcompleted,kpandkptaxkpplanningkpactivitieskpmaykpbekplimitedkptokpthekp
, Page 1-4 SOLUTIONS MANUAL
presentationkpofkpthekpsituationkptokpthekpgovernmentkpinkpthekpmostkplegallykpadvantageouskpmannerkpp
ossible.
TEST BANKkp
kp Federal Tax Research
kp kp
kp 13th Edition by Roby Sawyers, Steven Gill Chapters 1 -13
kp kp kp kp kp kp kp kp kp
,Page 1-2 SOLUTIONS MANUAL
CHAPTER 1 kp
INTRODUCTION TO TAX PRACTICE AND ETHICS
kp kp kp kp kp
DISCUSSIONkpQUESTIONS
1-1.
InkpthekpUnitedkpStates,kpthekptaxkpsystemkpiskpankpoutgrowthkpofkpthekpfollowingkpfivekpdisci
plines:kplaw,kpaccounting,kpeconomics,kppoliticalkpscience,kpandkpsociology.kpThekpenvironmentkpf
orkpthekptaxkpsystemkpiskpprovidedkpbykpthekpprincipleskpofkpeconomics,kpsociology,kpandkppoliticalkps
cience,kpwhilekpthekplegalkpandkpaccountingkpfieldskparekpresponsiblekpforkp thekpsystem‘skpinterpretat
ionkp andkpapplication.
Eachkpofkpthesekpdisciplineskpaffectskpthiskpcountry‘skptaxkpsystemkpinkpakpuniquekpway.kpEconomists
addresskpsuchkpissueskpaskphowkpproposedkptaxkplegislationkpwillkpaffectkpthekpratekpofkpinflationkporkpe
kp
conomickpgrowth.kpMeasurementkpofkpthekpsocialkpequitykpofkpakptaxkpandkpdeterminingkpwhetherkpakpt
axkpsystemkpdiscriminateskpagainstkpcertainkptaxpayerskparekpissueskpthatkparekpexaminedkpbykpsociol
ogistskpandkppoliticalkpscientists.
Finally,kpattorneyskparekpresponsiblekpforkpthekpinterpretationkpofkpthekptaxationkpstatutes,kpandkpacco
untantskpensurekpthatkpthesekpsamekpstatuteskparekpappliedkpconsistently.****8880()
Pagekp4
1-2. Thekpotherkpmajorkpcategorieskpofkptaxkppracticekpinkpadditionkptokptaxkpresearchkparekpaskpfollows:
• Taxkpcompliance
• Taxkpplanning
• Taxkplitigatio
nkpPagekp5
1-3.
Taxkpcompliancekpconsistskpofkpgatheringkppertinentkpinformation,kpevaluatingkpandkpclassif
yingkpthatkpinformation,kpandkpfilingkpanykpnecessarykptaxkpreturns.kpCompliancekpalsokpincludeskpot
herkpfunctionskpnecessarykptokpsatisfykpgovernmentalkprequirements,kpsuchkpaskprepresentingkpakpcli
entkpduringkpankpInternalkpRevenuekpServicekp(IRS)kpaudit.
,Federal Tax Research, 13th Edition Page 1-3
Pagekp5
1-4.
Mostkpofkpthekptaxkpcompliancekpworkkpiskpperformedkpbykpcommercialkptaxkppreparers,kpenr
olledkpagentskp(EAs),kpattorneys,kpandkpcertifiedkppublickpaccountantskp(CPAs).kpNoncomplexkpindi
vidual,kppartnership,kpandkpcorporatekptaxkpreturnskpoftenkparekpcompletedkpbykpcommercialkptaxkppre
parers.kpThekppreparationkpofkpmorekpcomplexkpreturnskpusuallykpiskpperformedkpbykpEAs,kpattorneys
,kpandkpCPAs.kpThekplatterkpgroupskpalsokpprovidekptaxkpplanningkpserviceskpandkprepresentkptheirkpclie
ntskpbeforekpthekpIRS.
AnkpEAkpiskponekpwhokpiskpadmittedkptokppracticekpbeforekpthekpIRSkpbykppassingkpakpspecialkpIRS-
administeredkpexamination,kporkpwhokphaskpworkedkpforkpthekpIRSkpforkpfivekpyearskpandkpiskpissuedkpakp
permitkptokprepresentkpclientskpbeforekpthekpIRS.kpCPAskpandkpattorneyskparekpnotkprequiredkptokptakekpth
iskpexaminationkpandkparekpautomaticallykpadmittedkptokppracticekpbeforekpthekpIRSkpifkptheykparekpinkpgo
odkpstandingkpwithkpthekpappropriatekpprofessionalkplicensingkpboard.
Pagekp5kpandkpCircularkp230
1-5.
Taxkpplanningkpiskpthekpprocesskpofkparrangingkpone‘skpfinancialkpaffairskptokpminimizekpanykpta
xkpliability.kpMuchkpofkpmodernkptaxkppracticekpcenterskparoundkpthiskpprocess,kpandkpthekpresultingkpoutco
mekpiskptaxkpavoidance.
Therekpiskpnothingkpillegalkporkpimmoralkpinkpthekpavoidancekpofkptaxationkpaskplongkpaskpthekptaxpayerkpr
emainskpwithinkplegalkpbounds.kpInkpcontrast,kptaxkpevasionkpconstituteskpthekpillegalkpnonpaymentkpofkp
akptaxkpandkpcannotkpbekpcondoned.kpActivitieskpofkpthiskpsortkpclearlykpviolatekpexistingkplegalkpconstraint
skpandkpfallkpoutsidekpofkpthekpdomainkpofkpthekpprofessionalkptaxkppractitioner.
Pagekp6
1-6.
Inkpankpopenkptaxkpplanningkpsituation,kpthekptransactionkpiskpnotkpyetkpcomplete;kptherefore,kpthe
taxkppractitionerkpmaintainskpsomekpdegreekpofkpcontrolkpoverkpthekppotentialkptaxkpliability,kpandkpthekpt
kp
ransactionkpmaykpbekpmodi-
fiedkptokpachievekpakpmorekpfavorablekptaxkptreatment.kpInkpakpclosedkptransactionkphowever,kpallkpofkpth
kp
ekppertinentkpactionskphavekpbeenkpcompleted,kpandkptaxkpplanningkpactivitieskpmaykpbekplimitedkptokpthekp
, Page 1-4 SOLUTIONS MANUAL
presentationkpofkpthekpsituationkptokpthekpgovernmentkpinkpthekpmostkplegallykpadvantageouskpmannerkpp
ossible.
