SWFT Comprehensive Volume 2019
42nd Edition
ISBN: 9780357233306
Author: Maloney
Publisher: Cengage
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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.
You are a CPA and do tax returns for individuals. A woman enters your office and asks you to complete her tax return. During your meeting, she mentions that she is expecting about $5000 in refund, and needs that to pay off a debt, that will result in a $1000 fine if she does not pay in the next month. You complete her tax return, but the refund is much lower than she expected, only $1000. She is very mad, and consults with another CPA. The other CPA determines that you made a significant mistake, but the period to file returns has passed. It will cost $500 to file an amendment. What damages is the woman likely entitled to?
Group of answer choices
A. None, because accountants can't be perfect
B. $500, because that is all that is needed to make it right
C. $500, and potentially $1000, because of the consequential damages of not being able to pay off her loan on time
D. $4000, because that is the difference between the proper refund and your mistake.
Jane, a partner in a CPA firm, borrows money from one of her firm's audit clients. She is a covered
member with respect to this client. For which type of loan may Jane borrow from the client and not
impair her independence?
A.) She uses the money to help her parents
B.) She purchases a home that will be her primary residence
C.) She uses the money to obtain a master's degree
D.) She purchases an automobile, which is collateral for the loan
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- Serena operates a gift shop. To reduce costs of credit card transactions, she offers customers a discount if they pay in cash. For the holiday rush, she hires some short-term workers but pays them cash and does not add them to the payroll. a. What are some of the tax problems Serena might have? b. Assess Serenas chances of audit by the IRS.arrow_forwardWhich taxpayer may benefit from the investment interest expense deduction? A. Everett. He borrowed money from his broker and used the funds to buy tax-exempt bonds. He paid interest on the loan. B. Frank. He opened a margin account with his broker, as he wanted access to a line of credit. He did not borrow any money from the account during the year. C. Marissa. She borrowed money from her broker to buy shares of stock for her investment account. She paid interest on the loan. D. Roberta. She borrowed money on her margin account and used the funds for a home-improvement project. She paid interest on the loan.arrow_forwardLinda operates an illegal gambling operation. Which of the following expenses that she incurs can reduce taxable income? a. Bribes paid to city employees. b. Salaries to employees. c. Security cameras. d. Kickbacks to police. e. Rent on an office. f. Depreciation on office furniture and equipment. g. Tenants casualty insurance. h. Utilities.arrow_forward
- Does the taxpayer recognize gross income in the following situations? a. Ava is a filing clerk at a large insurance company. She is permitted to leave the premises for lunch, but she usually eats in the company's cafeteria because it is quick and she is on a tight schedule. On average, she pays $2 for a lunch that would cost $12 at a restaurant and it cost her employer $10 to prepare. However, if the prices in the cafeteria were not so low and the food was not so delicious, she would probably bring her lunch at a cost of $3 per day. Ava's meals are provided as . Therefore, Ava would include $fill in the blank 08654900eff8078_2 per meal in her gross income. b. Scott is an executive for an international corporation located in New York City. Often he works late, taking telephone calls from the company's European branch. Scott often stays in a company-owned condominium when he has a late-night work session. The condominium is across the street from the company office and…arrow_forwardfind out solutions for multiple questionsarrow_forwardIn which of the following situations may the taxpayer take an education expense on Schedule C? a.John, a plumber by trade, is taking classes to qualify as an electrician so he may take on more complex contractor jobs. b.Henry, a self-employed administrative assistant, is taking an advanced Word computer program class through an adult school program. c.Ann Marie, a hostess at a restaurant, is taking a review course in order to pass the certified financial planner examination. d.Barbie, a salesperson, is flying on numerous commercial airplanes in order to observe the flight attendants so that she may improve her public relations skills.arrow_forward
- Lawyer is a cash basis taxpayer. The client calls Lawyer at 4.00 PM, December 31, 2022, saying she has Lawyer’s fee statement, has made out a check in full payment and, as she is about to leave for Europe, and she will leave the check with a desk clerk at Client’s apartment. Lawyer is ill, has no one to send to pick up the check, and he finally arranges to pick it up on January 2, 2023. In what year will the income from this transaction be recognized for tax purposes under cash method? Cite specific tax code/tax law in your response.arrow_forwardtutoe help me to find all this questionsarrow_forwardsolve all givenarrow_forward
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