Solution Manual for Federal Tax Research 12th Edition Sawyers, Gill||Newest version 2025 |ISBN: 9780357366387

Federal Tax Research, 13th Editio
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Solution Manual Federal Tax Research
13th Edition by Roby Sawyers, Steven Gill
Chapters 1 -13

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CHAPTER 1 UJ




INTRODUCTION TO TAX PRACTICE AND ETHICS UJ UJ UJ UJ UJ




DISCUSSION QUESTIONS
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1-1.
In the United States, the tax system is an outgrowth of the following five disciplines
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: law, accounting, economics, political science, and sociology. The environment for the tax
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system isprovided by the principles of economics, sociology, and political science, while th
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e legal and accounting fields are responsible for the system‘s interpretation and application.
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Each of these disciplines affects this country‘s tax system in a unique way. Economists addr
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esssuch issues as how proposed tax legislation will affect the rate of inflation or economic gr
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owth.Measurement of the social equity of a tax and determining whether a tax system discri
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minates against certain taxpayers are issues that are examined by sociologists and political sc
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ientists.

Finally, attorneys are responsible for the interpretation of the taxation statutes, and accountan
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tsensure that these same statutes are applied consistently.****8880()
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1-2. The other major categories of tax practice in addition to tax research are as follows:
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 Tax compliance UJ




 Tax planning UJ




 Tax litigatio UJ




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1-3.
Tax compliance consists of gathering pertinent information, evaluating and classifyin
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g that information, and filing any necessary tax returns. Compliance also includes other func
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tions necessary to satisfy governmental requirements, such as representing a client during an
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UJ InternalRevenue Service (IRS) audit.JU UJ UJ UJ

,Federal Tax Research, 13th Editio
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1-4.
Most of the tax compliance work is performed by commercial tax preparers, enrolled
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J agents (EAs), attorneys, and certified public accountants (CPAs). Noncomplex individual, pa
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rtnership,and corporate tax returns often are completed by commercial tax preparers. The pre
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paration of more complex returns usually is performed by EAs, attorneys, and CPAs. The lat
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ter groups alsoprovide tax planning services and represent their clients before the IRS.
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An EA is one who is admitted to practice before the IRS by passing a special IRS-
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administered examination, or who has worked for the IRS for five years and is issued a permit
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J to represent clients before the IRS. CPAs and attorneys are not required to take this examinati
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on and are automatically admitted to practice before the IRS if they are in good standing with t
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he appropriateprofessional licensing board.
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Page 5 and Circular 230
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1-5.
Tax planning is the process of arranging one‘s financial affairs to minimize any tax liab
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ility. Muchof modern tax practice centers around this process, and the resulting outcome is tax a
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voidance.
There is nothing illegal or immoral in the avoidance of taxation as long as the taxpayer remains
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UJ within legal bounds. In contrast, tax evasion constitutes the illegal nonpayment of a tax and ca
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nnotbe condoned. Activities of this sort clearly violate existing legal constraints and fall outside
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UJ of the domain of the professional tax practitioner.
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1-6.
In an open tax planning situation, the transaction is not yet complete; therefore, the tax
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practitionermaintains some degree of control over the potential tax liability, and the transaction
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may be modi- UJ UJ




UJ fied to achieve a more favorable tax treatment. In a closed transaction however, all of the perti
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nentactions have been completed, and tax planning activities may be limited to the presentation
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J of the situation to the government in the most legally advantageous manner possible.
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1-7.
Tax litigation is the process of settling a dispute with the IRS in a court of law. Typi
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cally, a taxattorney handles tax litigation that progresses beyond the final IRS appeal.
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1-8. CPAs serve is a support capacity in tax litigation.
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1-9.
Tax research consists of the resolution of unanswered taxation questions. The tax resear
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ch processincludes the following:
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1. Identification of pertinent issues; UJ UJ UJ




2. Specification of proper authorities; UJ UJ UJ




3. Evaluation of the propriety of authorities; and, UJ UJ UJ UJ UJ UJ




4. Application of authorities to a specific situation. UJ UJ UJ UJ UJ UJ




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1-10.


Circular 230 is issued by the Treasury Department and applies to all who practice befor
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e the IRS.Page 7
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1-11.
In addition to Circular 230, CPAs must follow the AICPA‘s Code of Professional Co
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nduct and Statements on Standards for Tax Services. CPAs must also abide by the rules of t
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he appropriatestate board(s) of accountancy.
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1-12. A return preparer must obtain 18 hours of continuing education from an IRS-
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approved CE Provider. The hours must include a 6 credit hour Annual Federal Tax Refresher c
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ourse (AFTR) that covers filing season issues and tax law updates. The AFTR course must incl
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ude a knowledge-
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