? ACC-4600500 ACC 46( ?? D ssts-effectivejanuary 1 xy 9 concepts_ n federal taxe
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? ACC-4600500 ACC 46( ?? D ssts-effectivejanuary 1 xy 9 concepts_ n federal taxe × e chegg Study Guided Sc -BioMe: Free American P X × ??Secure ! https://viewer.gcu.edu/TTRYSX 148 % ?? 117 of 912 pute the tax for cach vear of thc analySIS ETHICS DISCUSSION CASE Communication 82. You are a CPA who has be en preparing tax returns for Sign, Seal, and Deliver, a midsize CPA firm, for the last 5 years. During the current year, you are assigned the individual return of a new client, Guadalupe Piaz. Guadalupe has completed and returned the tax return questionnaire that the firm sent to her In reviewing the questionnaire, you notice that Guadalupe has included an entry for $10,000 in cash dividends received from Quinn Corporation. However, there is no supporting documcntation for thc dividcnd paymcnt in the information Guadalupc providc that until this ycar, you had prepared the tax rcturn for What concerns you is Quinn moted late last year.) You know that Quinn Corporation was organized as an S corpo- ration during the years that you prepared the return. During that period, Quinn was equally owned by 3 shareholders, and Guadalupe was not among them. In addition, the corporation was highly profitable, averaging approximately $6,000,000 per year in taxable income. Given this information, what are your obligations under the State ments on Standards for Tax Services (which can be found at www.cengagebrain.com)? Writc a memorandum to your supcrvisor cxplaining your conccrns and what actions, if any, you will nccd to take before you can (It was reassigned to another firm member when you were pro- preparc Guadalupe's rcturn. O Type here to search 9:19 PM 6/24/2018 ^Explanation / Answer
Memorandum to my supervisor:
Date: June 24, 2018
Subject: Return of Guadalupe Piaz
We have been relying on Statements on Standards for Tax Services 3 (SSTS 3) in the past to rely on the information that has been provided by our client. However in case of our new client - Guadalupe Piaz – the information provided by them appears to be incorrect. This is my main concern. As per SSTS 3 if the information is incomplete or inconsistent then I can, as a CPA, make reasonable inquiries about this particular piece of information.
The action that will have to be taken in this case is that we should encourage Guadalupe Piaz to provide us with supporting data with regards to the $10,000 cash dividends. Supporting documentation will be required so as to ensure that there are no misunderstandings, inadvertent errors, and possible administrative actions (i.e., audits) in the future. An examination of Quinn's return will show the correct of amount of income that Guadalupe should report from her investment in Quinn. If the $10,000 is not the correct amount of income to be reported, the CPA should discuss the problem with Guadalupe and advise her that the amount is incorrect.
This action will help us develop a ‘good faith belief’ with regards to the position of Guadalupe Piaz. However, if Guadalupe does not consent to the reporting of the correct amount of income from Quinn Corporation, then we should not prepare or sign the return.
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