Federal Tax Research 12th Edition Solution Manual – Sawyers & Gill – Complete, Verified & Updated for Graded A+

Federal TaxResearch, 13thEditio
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V SolutionManualFederalTaxResearch
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13thEditionbyRobySawyers,StevenGill
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V Chapters1-13V V

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m SOLUTIONS MANUAL m




CHAPTER1
INTRODUCTIONTOTAXPRACTICEANDETHICS
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DISCUSSIONQUESTIONS


1-1.
In the United States, the tax system is an outgrowth of the following five disciplines: law,
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m accounting, economics, political science, and sociology. The environment for the tax sy stem
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m isprovided by the principles of economics, sociology, and political science, while the le gal and
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m accounting V m m fieldsareresponsibleforthesystem‘sinterpretationand application. V




Each of these disciplines affects this country‘s tax system in a unique way. Economists addre sssuch
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m issues as how proposed tax legislation will affect the rate of inflation or economic gro
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m wth.Measurement of the social equity of a tax and determining whether a tax system discrimi nates
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againstcertaintaxpayersareissuesthatareexamined bysociologistsandpoliticalscien tists.
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Finally, attorneys are responsible for the interpretation of the taxation statutes, and accountant
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m sensurethatthesesamestatutesareapplied consistently.****8880() V




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1-2. Theother major categories of tax practicein addition to taxresearch areas follows:
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• Taxcompliance
• Taxplanning m




• Taxlitigatio V




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1-3.
Tax complianceconsistsof gatheringpertinentinformation,evaluating and classifyingthat
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m information,and filing anynecessarytaxreturns.Compliancealsoincludesother functions
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m necessarytosatisfygovernmentalrequirements,such asrepresentinga clientduringanIn
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m ternalRevenueService(IRS)audit. m m

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1-4.
Mostofthetaxcomplianceworkisperformed bycommercialtax preparers,enrolledagents m m V m




m (EAs),attorneys,and certifiedpublicaccountants(CPAs).Noncomplexindividual,partnership,and
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m corporatetaxreturnsoftenarecompleted bycommercialtaxpreparers.Thepreparationofmore V m




m complexreturnsusuallyisperformed byEAs, attorneys,andCPAs.Thelattergroupsalsoprovidetax m m V m m m




m planningservicesandrepresenttheirclientsbeforetheIRS. m




An EA is one who is admitted to practice before the IRS by passing a special IRS-administered
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m examination,or who hasworked for theIRSfor fiveyearsand isissueda permitt m m V m m V V m m o represent
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m clients before theIRS. CPAsand attorneys are notrequired to take thisexamination
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and areautomaticallyadmittedtopracticebeforetheIRSiftheyareingood standing with thea
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m ppropriateprofessionallicensingboard.


Page5andCircular 230 m m m m




1-5.
Tax planning istheprocessofarrangingone‘sfinancialaffairstominimizeanytaxliability.
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m Muchofmoderntaxpracticecentersaroundthisprocess,andtheresultingoutcomeistax avoidance. m V




m Thereisnothing illegalor immoralin theavoidanceoftaxation aslong asthetaxpayer remainswithin
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m legalbounds.Incontrast,taxevasionconstitutestheillegal nonpaymentofataxandcannotbe
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m condoned.Activitiesofthis sortclearlyviolateexistinglegalconstraintsand falloutsideofthe
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m domain oftheprofessionaltaxpractitioner. m




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1-6.
In an open tax planning situation, the transaction is not yet complete; therefore, the tax p
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m ractitioner maintains somedegreeofcontrolover the potential tax liability, andthe transaction m aybe modi-
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fied to achieve a more favorable tax treatment. In a closed transaction however, all of the pertin
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m entactions have been completed, and tax planning activities may be limited to the presentation of the
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m situationtothegovernmentin themostlegallyadvantageous mannerpossible.
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1-7.
Tax litigation istheprocessofsettlinga disputewiththeIRSin acourtoflaw.Typically,a
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m taxattorney handlestaxlitigation thatprogressesbeyondthefinalIRSappeal. V m




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1-8. CPAs serve is a support capacityin tax litigation.
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1-9.
Tax research consistsoftheresolution of unanswered taxationquestions.Thetaxresearch
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m processincludesthefollowing:


1. Identification ofpertinentissues; m




2. Specificationofproper authorities; m m m




3. Evaluation oftheproprietyofauthorities;and, m m m m




4. Application ofauthorities to a specific situation.
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1-10.


Circular230isissuedgbytheTreasuryDepartmentand appliestoallwhopracticebefor ethe IRS.Page
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7
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1-11.
Ingaddition to Circular 230, CPAs must followthe AICPA‘s Code of Professional Co nduct and
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m Statements on Standards for Tax Services. CPAs must also abide by the rules of th
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m appropriatestateboard(s)ofaccountancy. m




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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 Refreshergco urse
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m (AFTR) that covers filing season issues and tax law updates. The AFTR course must includ
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m knowledge-