103 VOCABULARY Flashcards
Fraud
Fraud is the intentional misrepresentation or failure to disclose a material fact or facts that results in injury or loss to someone relying on it.
Elements necessary to prove fraud include the following:
- A material (significant) misrepresentation or omission of fact
- Knowledge of the falsity (scienter)
- Intent that the misrepresentation be relied on
- Actual reliance by another party
- Resultant damage suffered as a result of reliance
Research shows that there are usually three conditions present when fraud occurs:
- A situational pressure (a nonshareable financial need)
- A perceived opportunity to commit and conceal the dishonest act (viewed as a way to secretly resolve the nonshareable pressure)
- Some aspect of the individual’s personal integrity that allows him to rationalize his dishonest behavior
Treasury Circular 230
Treasury Circular (TC) 230 regulates the conduct of tax professionals admitted to practice before the Internal Revenue Service, including ethical and technical types of matters. For example, TC 230 requires a practitioner to inform the client of any known error or omission in a prior year’s return and to advise the client of the consequences of such error or omission. Circular 230 also covers all written forms of federal tax advice, which scope extends not just from legal opinions but to e-mails and regular correspondence between a practitioner and client. Written tax advice must take the form of a complete and detailed opinion or else state explicitly it is not such a reliance opinion and thus cannot be relied upon for avoiding penalties from the Code. TC 230 also restricts the notion of “substantial authority” to a much higher degree of certainty.
Tax Position
A tax position is a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods.
FASB ASC 740-10-20
FASB ASC 740-10-20
