A tax return client was audited for a prior year return and assessed a tax deficiency because a material deduction was disallowed. Nevertheless, the client insists on taking the very same kind of deduction on this year’s return...
A tax return client was audited for a prior year return and assessed a tax deficiency because a material deduction was disallowed. Nevertheless, the client insists on taking the very same kind of deduction on this year’s return...
(a) A CPA absolutely may not prepare or sign the client’s return for this year un-less it conforms to the audit result for the prior year.
(b) A CPA may prepare and sign the client’s return for this year claiming a de-duction that previously was disallowed if the CPA determines as a matter of in-dependent professional judgment that the deduction is proper.
(c) A CPA may prepare and sign the client’s return for this year claiming a de-duction that previously was disallowed if the CPA receives a formal tax opinion from a law firm or from an unaffiliated CPA affirming that it is more likely than not that the deduction would be sustained on its merits if litigated.
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