Federal Tax Research, 13th Edition Page 1-1
Solution Manual For Federal Tax Research 12th Edition by Roby Sawyers,
Steven Gill ALL 13 Chapters Covered ISBN:9780357366387 100%
Complete A+ Complete A+ Study Guide Latest Version
FULL TEST BANK!!!
1|Page
,Page 1-2 SOLUTIONS MANUAL
CHAPTER 1
INTRODUCTION TO TAX PRACTICE AND ETHICS
DISCUSSION QUESTIONS
1-1. In the United States, the tax system is an outgrowth of the following five
disciplines: law, accounting, economics, political science, and sociology. The
environment for the tax system is provided by the principles of economics, sociology,
and political science, while the legal and accounting fields are responsible for the
system‘s interpretation and application.
Each of these disciplines affects this country‘s tax system in a unique way.
Economists address such issues as how proposed tax legislation will affect the rate of
inflation or economic growth. Measurement of the social equity of a tax and
determining whether a tax system discriminates against certain taxpayers are issues
that are examined by sociologists and political scientists.
Finally, attorneys are responsible for the interpretation of the taxation statutes, and
accountants ensure that these same statutes are applied consistently.****8880()
Page 4
1-2. The other major categories of tax practice in addition to tax research are as follows:
• Tax compliance
• Tax planning
• Tax litigation
Page 5
1-3. Tax compliance consists of gathering pertinent information, evaluating and classifying
that information, and filing any necessary tax returns. Compliance also includes other
functions necessary to satisfy governmental requirements, such as representing a client
during an Internal Revenue Service (IRS) audit.
, Federal Tax Research, 13th Edition Page 1-3
Page 5
1-4. Most of the tax compliance work is performed by commercial tax preparers, enrolled
agents (EAs), attorneys, and certified public accountants (CPAs). Noncomplex
individual, partnership,and corporate tax returns often are completed by commercial tax
preparers. The preparation of more complex returns usually is performed by EAs,
attorneys, and CPAs. The latter groups alsoprovide tax planning services and represent
their clients before the IRS.
An EA is one who is admitted to practice before the IRS by passing a special IRS-
administered examination, or who has worked for the IRS for five years and is issued a
permit to represent clients before the IRS. CPAs and attorneys are not required to take
this examination and are automatically admitted to practice before the IRS if they are in
good standing with the appropriateprofessional licensing board.
Page 5 and Circular 230
1-5. Tax planning is the process of arranging one‘s financial affairs to minimize any tax liability.
Muchof modern tax practice centers around this process, and the resulting outcome is
tax avoidance.
There is nothing illegal or immoral in the avoidance of taxation as long as the taxpayer
remains within legal bounds. In contrast, tax evasion constitutes the illegal nonpayment of a
tax and cannotbe condoned. Activities of this sort clearly violate existing legal constraints
and fall outside of the domain of the professional tax practitioner.
Page 6
1-6. In an open tax planning situation, the transaction is not yet complete; therefore, the tax
practitioner maintains some degree of control over the potential tax liability, and the
transaction may be modi- fied to achieve a more favorable tax treatment. In a closed
transaction however, all of the pertinent actions have been completed, and tax planning
3|Page
, Page 1-4 SOLUTIONS MANUAL
activities may be limited to the presentation of the situation to the government in the
most legally advantageous manner possible.
Solution Manual For Federal Tax Research 12th Edition by Roby Sawyers,
Steven Gill ALL 13 Chapters Covered ISBN:9780357366387 100%
Complete A+ Complete A+ Study Guide Latest Version
FULL TEST BANK!!!
1|Page
,Page 1-2 SOLUTIONS MANUAL
CHAPTER 1
INTRODUCTION TO TAX PRACTICE AND ETHICS
DISCUSSION QUESTIONS
1-1. In the United States, the tax system is an outgrowth of the following five
disciplines: law, accounting, economics, political science, and sociology. The
environment for the tax system is provided by the principles of economics, sociology,
and political science, while the legal and accounting fields are responsible for the
system‘s interpretation and application.
Each of these disciplines affects this country‘s tax system in a unique way.
Economists address such issues as how proposed tax legislation will affect the rate of
inflation or economic growth. Measurement of the social equity of a tax and
determining whether a tax system discriminates against certain taxpayers are issues
that are examined by sociologists and political scientists.
Finally, attorneys are responsible for the interpretation of the taxation statutes, and
accountants ensure that these same statutes are applied consistently.****8880()
Page 4
1-2. The other major categories of tax practice in addition to tax research are as follows:
• Tax compliance
• Tax planning
• Tax litigation
Page 5
1-3. Tax compliance consists of gathering pertinent information, evaluating and classifying
that information, and filing any necessary tax returns. Compliance also includes other
functions necessary to satisfy governmental requirements, such as representing a client
during an Internal Revenue Service (IRS) audit.
, Federal Tax Research, 13th Edition Page 1-3
Page 5
1-4. Most of the tax compliance work is performed by commercial tax preparers, enrolled
agents (EAs), attorneys, and certified public accountants (CPAs). Noncomplex
individual, partnership,and corporate tax returns often are completed by commercial tax
preparers. The preparation of more complex returns usually is performed by EAs,
attorneys, and CPAs. The latter groups alsoprovide tax planning services and represent
their clients before the IRS.
An EA is one who is admitted to practice before the IRS by passing a special IRS-
administered examination, or who has worked for the IRS for five years and is issued a
permit to represent clients before the IRS. CPAs and attorneys are not required to take
this examination and are automatically admitted to practice before the IRS if they are in
good standing with the appropriateprofessional licensing board.
Page 5 and Circular 230
1-5. Tax planning is the process of arranging one‘s financial affairs to minimize any tax liability.
Muchof modern tax practice centers around this process, and the resulting outcome is
tax avoidance.
There is nothing illegal or immoral in the avoidance of taxation as long as the taxpayer
remains within legal bounds. In contrast, tax evasion constitutes the illegal nonpayment of a
tax and cannotbe condoned. Activities of this sort clearly violate existing legal constraints
and fall outside of the domain of the professional tax practitioner.
Page 6
1-6. In an open tax planning situation, the transaction is not yet complete; therefore, the tax
practitioner maintains some degree of control over the potential tax liability, and the
transaction may be modi- fied to achieve a more favorable tax treatment. In a closed
transaction however, all of the pertinent actions have been completed, and tax planning
3|Page
, Page 1-4 SOLUTIONS MANUAL
activities may be limited to the presentation of the situation to the government in the
most legally advantageous manner possible.
