Solution Manual For Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill

FederalYTaxYResearch,Y12thYEditio PageY1-1
n
Solution Manual Federal Tax Research 12th Edition by Roby Sawyers, Steven Gill


CHAPTERY1
INTRODUCTIONYTOYTAXYPRACTICEYANDYETHICS



DISCUSSIONYQUESTIONS


1-1.
InYtheYUnitedYStates,YtheYtaxYsystemYisYanYoutgrowthYofYtheYfollowingYfiveYdiscipl
ines:Ylaw,Yaccounting,Yeconomics,YpoliticalYscience,YandYsociology.YTheYenvironmentYforYt
heYtaxYsystemYisYprovidedYbyYtheYprinciplesYofYeconomics,Ysociology,YandYpoliticalYscience
,YwhileYtheYlegalYandYaccountingYfieldsYareYresponsibleYforY theYsystem‘sYinterpretationY and
Yapplication.


EachYofYtheseYdisciplinesYaffectsYthisYcountry‘sYtaxYsystemYinYaYuniqueYway.YEconomistsYa
ddressYsuchYissuesYasYhowYproposedYtaxYlegislationYwillYaffectYtheYrateYofYinflationYorYecon
omicYgrowth.YMeasurementYofYtheYsocialYequityYofYaYtaxYandYdeterminingYwhetherYaYtaxYs
ystemYdiscriminatesYagainstYcertainYtaxpayersYareYissuesYthatYareYexaminedYbyYsociologistsY
andYpoliticalYscientists.
Finally,YattorneysYareYresponsibleYforYtheYinterpretationYofYtheYtaxationYstatutes,YandYaccoun
tantsYensureYthatYtheseYsameYstatutesYareYappliedYconsistently.


PageY4


1-2. TheYotherYmajorYcategoriesYofYtaxYpracticeYinYadditionYtoYtaxYresearchYareYasYfollows:


 TaxYcompliance
 TaxYplanning
 TaxYlitigatio


nYPageY5


1-3.
TaxYcomplianceYconsistsYofYgatheringYpertinentYinformation,YevaluatingYandYclassify
ingYthatYinformation,YandYfilingYanyYnecessaryYtaxYreturns.YComplianceYalsoYincludesYother
YfunctionsYnecessaryYtoYsatisfyYgovernmentalYrequirements,YsuchYasYrepresentingYaYclientYd

,PageY1-2 SOLUTIONSYMANUAL
uringYanYInternalYRevenueYServiceY(IRS)Yaudit.

,FederalYTaxYResearch,Y12thYEditio PageY1-3
n


PageY5


1-4.
MostYofYtheYtaxYcomplianceYworkYisYperformedYbyYcommercialYtaxYpreparers,Yenroll
edYagentsY(EAs),Yattorneys,YandYcertifiedYpublicYaccountantsY(CPAs).YNoncomplexYindividu
al,Ypartnership,YandYcorporateYtaxYreturnsYoftenYareYcompletedYbyYcommercialYtaxYpreparers.
YTheYpreparationYofYmoreYcomplexYreturnsYusuallyYisYperformedYbyYEAs,Yattorneys,YandYC
PAs.YTheYlatterYgroupsYalsoYprovideYtaxYplanningYservicesYandYrepresentYtheirYclientsYbefore
YtheYIRS.


AnYEAYisYoneYwhoYisYadmittedYtoYpracticeYbeforeYtheYIRSYbyYpassingYaYspecialYIRS-
administeredYexamination,YorYwhoYhasYworkedYforYtheYIRSYforYfiveYyearsYandYisYissuedYaYper
mitYtoYrepresentYclientsYbeforeYtheYIRS.YCPAsYandYattorneysYareYnotYrequiredYtoYtakeYthisYex
aminationYandYareYautomaticallyYadmittedYtoYpracticeYbeforeYtheYIRSYifYtheyYareYinYgoodYstan
dingYwithYtheYappropriateYprofessionalYlicensingYboard.


PageY5YandYCircularY230




1-5.
TaxYplanningYisYtheYprocessYofYarrangingYone‘sYfinancialYaffairsYtoYminimizeYanyYtaxYl
iability.YMuchYofYmodernYtaxYpracticeYcentersYaroundYthisYprocess,YandYtheYresultingYoutcomeY
isYtaxYavoidance.
ThereYisYnothingYillegalYorYimmoralYinYtheYavoidanceYofYtaxationYasYlongYasYtheYtaxpayerYrem
ainsYwithinYlegalYbounds.YInYcontrast,YtaxYevasionYconstitutesYtheYillegalYnonpaymentYofYaYtax
YandYcannotYbeYcondoned.YActivitiesYofYthisYsortYclearlyYviolateYexistingYlegalYconstraintsYandY
fallYoutsideYofYtheYdomainYofYtheYprofessionalYtaxYpractitioner.


PageY6


1-6.
InYanYopenYtaxYplanningYsituation,YtheYtransactionYisYnotYyetYcomplete;Ytherefore,YtheYt
axYpractitionerYmaintainsYsomeYdegreeYofYcontrolYoverYtheYpotentialYtaxYliability,YandYtheYtrans
actionYmayYbeYmodi-
YfiedYtoYachieveYaYmoreYfavorableYtaxYtreatment.YInYaYclosedYtransactionYhowever,YallYofYtheY
pertinentYactionsYhaveYbeenYcompleted,YandYtaxYplanningYactivitiesYmayYbeYlimitedYtoYtheYpres

, PageY1-4 SOLUTIONSYMANUAL
entationYofYtheYsituationYtoYtheYgovernmentYinYtheYmostYlegallyYadvantageousY mannerY possible
.