Federal Tax Research 12th Edition Solutions Manual – Complete Case Answers, Ethics Guides & Chapter-by-Chapter Breakdown

FederalMTaxMResearch,M12thMEditi PageM1
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ResearchMCaseMSolutions


TheMsolutionsMtoMtheMresearchMcasesMareMvalidMasMofMFebruaryM2020.MItMisMlikelyMthatMthereMwillM
beMchangesMinMtheMcode,Mregulations,MadministrativeMpronouncements,MandMcaseMlawMafterMthisM
manualMisMpublished.MFurther,MitMisMlikelyMthatMtheMservicesMavailableMtoMtheMstudentsMwillMnotMb
eMidenticalMtoMthoseMavailableMtoMtheMauthorsMofMthisMmanual.MAllMpossibleMcitationsMareMnotMpro
vided;MonlyMaMsampleMofMtheMcitationsMmostMlikelyMprovidedMbyMstudentsMisMpresented.MConseque
ntly,MtheMstudents‘MresponsesMmayMvaryMfromMthoseMlistedMforMeachMquestion.


ChapterM1

Note:MForMtheMfollowingMcases,MstudentsMmayMpresentMotherMpositions,MwhichMcouldMbeMconside
redMethicallyMcorrect.MTheManswersMpresentedMbelowMareMtheMviewsMofMtheMauthorsMandMareMpres
entedMasMaMbasisMtoMjudgeMaMstudent‘sMethicalMconclusion:


1-1
AICPAMCodeMofMProfessionalMCo
nductMETM§M1.200.001:MIndependenc
e
ETM§M1.100.001:MObjectivityMandMIntegrity
ETM§M1.700.001:MConfidentialMClientMInformation
M ETM§M1.400.001:MActsMDiscreditable


SSTSM M No.M1:MTaxMReturnMPositions


ItMisMnotMadvisableMforMAhiMCorporationMtoMcompleteMtheMtransaction.MUnderMETM
§M1.100.001,MallMprofessionalMservicesMbyMaMCPAMshouldMbeMrenderedMwithMobjec
tivityMandMintegrity,MavoidingManyMpotentialMorMexistingMconflictsMofMinterest.MThe
M CPAMmustMexerciseMdueMprofessionalMcareMinMtheMperformanceMofMallMprofessiona
lMservicesMandMcomplyMwithMallMstandardsMpromulgatedMbyMtheMbodiesMdesignated
M byMtheMAICPAMCouncil.MUnderMETM§1.400.001,MaMCPAMmustMnotMcommitManMac
tMthatMisMdiscreditableMtoMtheMprofession.MUnderMtheMStatementsMofMStandardsMforM
Tax

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ServicesM(SSTS),MaMCPAMshouldMhaveMaMgood-
faithMbeliefMthatMaMrecommendedMpositionMhasMaMrealisticMpossibilityMofMbeingMsus
tainedMifMchallenged.


TheMCPAMmustMuseMjudgmentMthatMreflectsMprofessionalMcompetenceMandMservesMt
heMclient‘sMneeds.MWrittenMcommunicationMshouldMbeMgivenMtoMtheMclientMinMimp
ortant,Munusual,MorMcomplicatedMtransactions.MTheMCPAMshouldMadviseMtheMclient
M ofMsuchMrisksMasMinMtheMinstantMcase.MWhereMtheMtaxpayerMinsistsMonMtheMspecificM
position,MtheMCPAMshouldMnotMcontinueMwithMtheMengagementMasMtheMtaxMreturnMp
ositionMisMexploitativeMandMfrivolous.


1-2.
AICPAMCodeMofMProfessionalMCondu
ctM ETM§M1.100.001:MObjectivityMandMInte
grity


SSTSM No.M1:MTaxMReturnMPositions;MNo.M6:MKnowledgeMofMError:MReturnMPrepar
ationMandMAdministrativeMProceedings


AMCPAMmustMcomplyMwithMallMstandardsMpromulgatedMbyMbodiesMdesignatedMbyMt
heMAICPAMCouncilMandMconformMtoMgenerallyMacceptedMaccountingMprinciples.M
UnderMETM§M1.100.001,MallMprofessionalMservicesMbyMaMCPAMshouldMbeMrenderedM
withMobjectivityMandMintegrity,MavoidingManyMpotentialMorMexistingMconflictsMofMint
erest.MInMaddition,MaMCPAMshouldMneitherMknowinglyMmisrepresentMfactsMnorMsubo
rdinateMhisMorMherMjudgmentMtoMthatMofMothersMinMrenderingManyMprofessionalMserv
ices.


UnderMtheMStatementsMofMStandardsMforMTaxMServicesM(SSTS),MaMCPAMshouldMha
veMaMgood-
faithMbeliefMthatMaMrecommendedMpositionMhasMaMrealisticMpossibilityMofMbeingMsu
stainedMifMchallenged.MInMtheMinstantMcase,MtheMCPAMmustMnotifyMandMadviseMtheM
clientMpromptlyMuponMhisMorMherMknowledgeMofMaMpriorMorMcurrentMtaxMreturnMerro
r(s)MthatMhasMaMsignificantMeffectMuponMtheMtaxpayer‘sMliability.MTheMclientMmustM

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beMnotifiedMandMadvisedMeitherMorallyMorMinMwriting.MOnceMrentalMpricesMofMtheMc
urrentMareaMhaveMbeenMverifiedMandMcomparedMagainstMtheMamountMpaidMbyMHadd
ockMCorporation,MtheMCPAMshouldMtakeMtheMappropriateMactions.MTheMCPAMshoul
d

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considerMwhetherMtoMproceedMwithMtheMpreparationMofMtheMcurrentMyear‘sMreturnMo
rMresignMfromMtheMengagementMcompletely.MHeMorMsheMshouldMnotMsignMtheMtaxMret
urnMuntilMtheMappropriateMmeasuresMhaveMbeenMtakenMtoMcorrectMtheMerrorsMmadeM
inMtheMcurrentMandMpriorMreturns.


1-3.
AICPAMCodeMofMProfessionalMCondu
ctM ETM§M1.100.001:MObjectivityMandMInte
grity
ETM§M1.700.001:MConfidentialMClientMInformation


UnderMETM§M1.700.001MofMtheMAICPAMCodeMofMProfessionalMConduct,MaMCPAMin
M theMpracticeMofMpublicMaccountingMmustMnotMdiscloseMconfidentialMclientMdataMwi
thoutMspecificMconsentMofMtheMclient.MThereMareMexceptionsMthatMexistMforMRuleM30
1.MUnderMETM§M1.100.001,MallMprofessionalMservicesMbyMaMCPAMshouldMbeMrender
edMwithMobjectivityMandMintegrity,MavoidingManyMpotentialMorMexistingMconflictsMof
Minterest.MInMaddition,MaMCPAMshouldMneitherMknowinglyMmisrepresentMfactsMnorMs
ubordinateMhisMorMherMjudgmentMtoMthatMofMothersMinMrenderingManyMprofessionalM
services.


InMtheMinstantMcase,MtheMCPAMshouldMnotifyMtheMclient,MSharkMCorporation,MofMthe
M misrepresentationMofMfacts.MIfMtheMclientMisMnotMwillingMtoMnotifyMtheMbuyerMofMth
eMbuilding‘sMcurrentMstructuralMcondition,MtheMCPAMshouldMresignMfromMtheMenga
gement.MIfMtheMCPAMhasMalreadyMtoldMtheMotherMsideMthatMtheMbuildingMwasMOKMw
henMheMorMsheMlearnsMofMitsMstatus,MtheMCPAMshouldMresignMfromMtheMengagement
M withMSharkMCorporation.


1-4.
AICPAMCodeMofMProfessionalMCondu
ctM ETM§M1.100.001:MObjectivityMandMInte
grityMETM§M1.300.001MGeneralMStandards
ETM§M1.700.001:MConfidentialMClientMInformation