Taxpayer X and Taxpayer Y each agree to pay their tax preparer, Randy, from the refund theyreceive from the IRS. Upon presenting their refund checks to Randy, Randy pays them thedifference in cash. Randy then endorses both checks and deposits them into his account.Randy has a Power of Attorney for Taxpayer X, but no Power of Attorney for Taxpayer Y.Randy can negotiate and endorse the refund check of Taxpayer X, but not that of TaxpayerYRandy can negotiate and endorse the refund check of Taxpayer Y, but not that of TaxpayerXRandy cannot negotiate or endorse either refundcheckRandy can negotiate and endorseboth refund checksNEXT

Because IRS form 2848 for granting power of attorney provides a tax preparer the right to deal with…

Answered: Taxpayer X and Taxpayer Y each agree to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Enzo is preparing a client's return. The taxpayer is claiming the Earned Income Credit (EIC), Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), and the American Opportunity Tax Credit (AOTC). Which of the following best describes the actions Enzo must take to substantiate the taxpayer's eligibility for the credits?
(Federal Taxation, Individual Income Taxes) Janice Morgan, age 24, is single and has no dependents. She is a freelance writer. In January 2019, Janice opened her own office located at 2751 Waldham Road, Pleasant Hill, NM 88135. She called her business Writers Anonymous. Janice is a cash basis taxpayer. She lives at 132 Stone Avenue, Pleasant Hill, NM 88135. Her Social Security number is 123-45-6782. Janice's parents continue to provide health insurance for her under their policy. Janice did not engage in any virtual currency transactions during the year and wants to contribute to the Presidential Election Campaign Fund. During 2019, Janice reported the following income and expense items connected with her business. Income from sale of articles $85,000 Rent 16,500 Utilities…
John Taylor, a tax consultant, charges his clients a fee based on the percentage of the tax he saves a client. John received a payment from a client, but he realised that Angela didn’t declare income. Therefore, the income tax return that John’s prepared understated income tax liability.Taking into consideration the Accounting Professional Code of Conduct explain the Tax Penalties and actions John should take following his discovery.
Max and Annie are roommates sharing an apartment. Although they know each other well, they have respect for each other’s privacy. Thus, when Max’s Form 1040 was audited by the IRS, he made no mention of the audit to Annie. When Annie was clearing the answering machine that they shared, she heard the following message: “Max, this is Richard, the IRS auditor. My figures show that you owe the government $10,000 in taxes and another $4,500 in penalties and interest.” When Annie brought up the message during dinner conversation that night, Max was furious. How could the IRS be so careless as to broadcast this news to a stranger? Did not he have any privacy and confidentiality rights? Max calls you to determine whether he might have a case against the IRS or Richard, the agent. Prepare a file memo assessing Max’s position.
Craig commits fraud on his tax return. It is found that he was $40,000 deficient in his tax because of the fraud. What would his penalty be? Please show all calculations to demonstrate how you arrived at your answer. In your response, please make sure to take all of the facts above into consideration. You can refer back to the text, lecture videos, and the IRS website.
Interest and Penalties (LO 12.3) For each of the following situations, select the nature of the penalty and amount of the penalty that could be imposed. a. Larry is a tax protester and files his tax return in the name of "Mickey Mouse." b. Anne writes a check for $900 in payment of her taxes that she knows will not clear the bank due to insufficient funds in her C. account. Gerald understated his tax liability by $10,000. The total amount of tax that should have been shown on his return was $70,000. Description of the Penalty Filing a frivolous tax return Bad check ✓ Accuracy-related penalty, substantial understatement Penalty Amount
1.
Doug and Tammy are not related and do not live together. Doug is employed and earns commission income. Tammy is an independent broker and earns commission income. Both maintain an office in their homes. Which of the following statements is false regarding the tax treatment of their incomes for 2020? (a) Tammy can incur a non-capital loss, but Doug cannot. (b) Tammy and Doug can deduct a portion of their property tax and house insurance (c) Tammy can deduct a portion of her home mortgage interest, but Doug cannot. (d) Tammy and Doug can claim CCA on their computers.
Flynn, a self-employed taxpayer, mows Rapunzel's lawn at the end of year 1. At the beginning of year 2, Rapunzel pays Flynn. If Flynn uses the accrual method of accounting, he will have gross income in which year? Year 1 Year 2
Sarah is a local CPA who performs part-time bookkeeping services for local businesses and does tax returns during tax season. Sarah does not know about the AICPA Code of Conduct or the IRS Circular 230. Draft a memo for your files and an email to Sarah to answer the questions below. 1. Explain what parts of the AICPA Code of Conduct apply to Sarah. 2. Explain what parts of the IRS Circular 230 apply to Sarah.
Jack and his wife move from Maryland to the state of New York. After the move, Jack works in Connecticut and his wife works in New York City. There are no reciprocal agreements between any of the states. For the year of the move, what should they do with their state tax return(s)? a.) They should file part-year resident returns for Maryland and New York. The New York return would include income earned in Connecticut. b.) They should file part-year resident returns with Maryland and New York and a nonresident with Connecticut. c.) They should split the federal adjustment for unreimbursed moving expenses between the Maryland and New York returns d.) They should claim a credit for taxes paid to a nonresident state, split between the Maryland and New York returns
Lenny is the sole shareholder of an S corporation. Each year, he draws a salary and receives a distribution of profits from the corporation. Which of the following statements is TRUE? Lenny's share of the profits will not be subject to social security or medicare taxes. Lenny's salary will be treated as self-employment income and must be reported on Schedule C. Lenny will pay income taxes only on the portion of the profits that he actually distributes to himself. Lenny may determine his salary by selecting the amount that provides him the greatest tax benefit, regardless of the market rate for the services he provides.

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