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. 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 addresssuch 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 accountantsensure 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:
,Federal Tax Research, 13th Edition Page 1-3
Tax compliance
Tax planning
Tax
litigationPage 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 InternalRevenue Service (IRS) audit.
, Page 1-4 SOLUTIONS MANUAL
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 also
provide 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
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. 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 addresssuch 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 accountantsensure 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:
,Federal Tax Research, 13th Edition Page 1-3
Tax compliance
Tax planning
Tax
litigationPage 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 InternalRevenue Service (IRS) audit.
, Page 1-4 SOLUTIONS MANUAL
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 also
provide 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
