Solution Manual for Federal Tax Research, 13th Edition by Roby Sawyers and Steven Gill

Federal Tax Research, 13th Edition Page 1-1


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

,Page 1-2 SOLUTIONS MANUAL




CHAPTER 1
INTRODUCTION TO TAX PRACTICE AND ETHICS



DISCUSSION QUESTIONS


1-1.
InAtheAUnitedAStates,AtheAtaxAsystemAisAanAoutgrowthAofAtheAfollowingAfiveAdiscipline
s:Alaw,Aaccounting,Aeconomics,ApoliticalAscience,AandAsociology.ATheAenvironmentAforAtheAta
xAsystemAisAprovidedAbyAtheAprinciplesAofAeconomics,Asociology,AandApoliticalAscience,Awhile
AtheAlegalAandAaccountingAfieldsAareAresponsibleAforA theAsystem‘sAinterpretationA andAapplicati
on.


EachAofAtheseAdisciplinesAaffectsAthisAcountry‘sAtaxAsystemAinAaAuniqueAway.AEconomistsAadd
ressAsuchAissuesAasAhowAproposedAtaxAlegislationAwillAaffectAtheArateAofAinflationAorAeconomic
Agrowth.AMeasurementAofAtheAsocialAequityAofAaAtaxAandAdeterminingAwhetherAaAtaxAsystemAdi
scriminatesAagainstAcertainAtaxpayersAareAissuesAthatAareAexaminedAbyAsociologistsAandApolitic
alAscientists.

Finally,AattorneysAareAresponsibleAforAtheAinterpretationAofAtheAtaxationAstatutes,AandAaccounta
ntsAensureAthatAtheseAsameAstatutesAareAappliedAconsistently.****8880()
PageA4


1-2. TheAotherAmajorAcategoriesAofAtaxApracticeAinAadditionAtoAtaxAresearchAareAasAfollows:


• TaxAcompliance
• TaxAplanning
• TaxAlitigatio


nAPageA5


1-3.
TaxAcomplianceAconsistsAofAgatheringApertinentAinformation,AevaluatingAandAclassifyi
ngAthatAinformation,AandAfilingAanyAnecessaryAtaxAreturns.AComplianceAalsoAincludesAotherAfu
nctionsAnecessaryAtoAsatisfyAgovernmentalArequirements,AsuchAasArepresentingAaAclientAduring
AanAInternalARevenueAServiceA(IRS)Aaudit.

,Federal Tax Research, 13th Edition Page 1-3



PageA5


1-4.
MostAofAtheAtaxAcomplianceAworkAisAperformedAbyAcommercialAtaxApreparers,Aenrolle
dAagentsA(EAs),Aattorneys,AandAcertifiedApublicAaccountantsA(CPAs).ANoncomplexAindividual,A
partnership,AandAcorporateAtaxAreturnsAoftenAareAcompletedAbyAcommercialAtaxApreparers.ATheA
preparationAofAmoreAcomplexAreturnsAusuallyAisAperformedAbyAEAs,Aattorneys,AandACPAs.ATh
eAlatterAgroupsAalsoAprovideAtaxAplanningAservicesAandArepresentAtheirAclientsAbeforeAtheAIRS.


AnAEAAisAoneAwhoAisAadmittedAtoApracticeAbeforeAtheAIRSAbyApassingAaAspecialAIRS-
administeredAexamination,AorAwhoAhasAworkedAforAtheAIRSAforAfiveAyearsAandAisAissuedAaApermi
tAtoArepresentAclientsAbeforeAtheAIRS.ACPAsAandAattorneysAareAnotArequiredAtoAtakeAthisAexamina
tionAandAareAautomaticallyAadmittedAtoApracticeAbeforeAtheAIRSAifAtheyAareAinAgoodAstandingAwit
hAtheAappropriateAprofessionalAlicensingAboard.


PageA5AandACircularA230




1-5.
TaxAplanningAisAtheAprocessAofAarrangingAone‘sAfinancialAaffairsAtoAminimizeAanyAtaxAlia
bility.AMuchAofAmodernAtaxApracticeAcentersAaroundAthisAprocess,AandAtheAresultingAoutcomeAisAta
xAavoidance.
ThereAisAnothingAillegalAorAimmoralAinAtheAavoidanceAofAtaxationAasAlongAasAtheAtaxpayerAremain
sAwithinAlegalAbounds.AInAcontrast,AtaxAevasionAconstitutesAtheAillegalAnonpaymentAofAaAtaxAandA
cannotAbeAcondoned.AActivitiesAofAthisAsortAclearlyAviolateAexistingAlegalAconstraintsAandAfallAouts
ideAofAtheAdomainAofAtheAprofessionalAtaxApractitioner.


PageA6


1-6.
InAanAopenAtaxAplanningAsituation,AtheAtransactionAisAnotAyetAcomplete;Atherefore,AtheAtax
ApractitionerAmaintainsAsomeAdegreeAofAcontrolAoverAtheApotentialAtaxAliability,AandAtheAtransactio
nAmayAbeAmodi-
AfiedAtoAachieveAaAmoreAfavorableAtaxAtreatment.AInAaAclosedAtransactionAhowever,AallAofAtheAper
tinentAactionsAhaveAbeenAcompleted,AandAtaxAplanningAactivitiesAmayAbeAlimitedAtoAtheApresentati
onAofAtheAsituationAtoAtheAgovernmentAinAtheAmostAlegallyAadvantageousAmannerApossible.

, Page 1-4 SOLUTIONS MANUAL

PageA6


1-7.
TaxAlitigationAisAtheAprocessA ofAsettlingAaAdisputeAwithAtheAIRSAinAaAcourtAofAlaw.ATy
pically,AaAtaxAattorneyAhandlesAtaxAlitigationAthatAprogressesAbeyondAtheAfinalAIRSAappeal.


PageA6


1-8. CPAsAserveAisAaAsupportAcapacityAinAtaxAlitigation.


PageA6


1-9.
TaxAresearchAconsistsAofAtheAresolutionAofAunansweredAtaxationAquestions.A TheAtaxAresea
rchAprocessAincludesAtheAfollowing:


1. IdentificationAofApertinentAissues;
2. SpecificationAofAproperAauthorities;
3. EvaluationAofAtheAproprietyAofAauthorities;Aand,
4. ApplicationAofAauthoritiesAtoAaAspecificAsituation.


PageA6


1-10.


CircularA230AisAissuedAbyAtheATreasuryADepartmentAandAappliesAtoAallAwhoApracticeAbef


oreAtheAIRS.APageA7


1-11.
InAadditionAtoACircularA230,ACPAsAmustAfollowAtheAAICPA‘sACodeAofAProfessionalAC
onductAandAStatementsAonAStandardsAforATaxAServices.ACPAsAmustAalsoAabideAbyAtheArulesAo
fAtheAappropriateAstateAboard(s)AofAaccountancy.


PageA7


1-12. AAreturnApreparerAmustAobtainA18AhoursAofAcontinuingAeducationAfromAanAIRS-
approvedACEAProvider.ATheAhoursAmustAincludeAaA6AcreditAhourAAnnualAFederalATaxARefresherA
courseA(AFTR)AthatAcoversAfilingAseasonAissuesAandAtaxAlawAupdates.ATheAAFTRAcourseAmustAi
ncludeAaAknowledge-