Chap2%20HW%20Solutions - Instructor's Manual 19 2375 Ethics...

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Instructor's Manual 19 ¶2375 Ethics Rules for Practitioners The Tax Committee of the American Institute of CPAs issued 10 statements on elected topics between 1964 and 1977. The first two statements were withdrawn in 1982 by the Executive Committee of the Federal Tax Division. The remaining eight statements were revised and renumbered in 1988 and, in 2000, they were renamed ‘‘Statements on Standards for Tax Services.'' Prior to 2000, they were advisory opinions of the Committee as to what are appropriate standards of conduct in certain situations. Effective October 31, 2000, the Statements are enforceable standards for AICPA members. ANSWERS TO KEYSTONE PROBLEMS—CHAPTER 2 (¶2161.) The leading case on the issue of the deductibility of home office expenses by teachers is David J. Weissman, 85-1 USTC ¶9106, 751 F.2d 512 (CA-3 1984), rev'g 47 TCM 520, CCH Dec. 40,645(M), T.C. Memo. 1983-724. A college professor was required to do scholarly research and writing in addition to teaching. He spent the majority of his employment-related time doing research and writing at home because a quiet and safe place to perform this work was not available at the college. The court held that he was entitled to deduct his home office expenses because his home, not his college office, was his principal place of business. The home office was necessary to carry out an essential aspect of his job (i.e., his research) and was maintained for the convenience of the employer. The 7th Circuit in Thomas C. Cadwallader v. Commissioner, 90-2 USTC ¶50,597, aff'g 57 TCM 1030, denied a deduction for a home office maintained for the taxpayer's own convenience where a university provided him with adequate office space. The U.S. Supreme Court, in another office-in-home case, Nadar E. Soliman , 93-1 USTC ¶50,014, held that the office-in-home must be the principal place where the activities are performed to be deductible. Since Weissman's principal income-earning activity could be held to be teaching, the deductibility of his office-in-home after the Soliman decision would be questionable. (¶2333.) In an office examination the taxpayer or a representative should take only information or support for items which are requested of the taxpayer by the IRS; otherwise the tax auditor might open up other areas for investigation. Situations may vary, but some practitioners believe that it is better for the taxpayer, assuming he or she has a representative such as a CPA or a lawyer, not to be present because the representative can keep better control over the interview and also approach the matter in a less emotional atmosphere. IRS personnel should be treated courteously and should be promptly furnished information and substantiation relating to applicable tax return items. Although the cooperation of the taxpayer (or representative) is important, the taxpayer should respond only to questions asked by the agent. Disclosing unnecessary information could cause problems to the taxpayer.
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This homework help was uploaded on 04/09/2008 for the course ACCT Acct 308 taught by Professor Lau during the Summer '06 term at CSU Fullerton.

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Chap2%20HW%20Solutions - Instructor's Manual 19 2375 Ethics...

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