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regulation > Ethics Professional and Legal Responsibilities > Flashcards

Ethics Professional and Legal Responsibilities Flashcards

1
Q

Contingent fee in compliance with circ 230

A

lots of examination needed so exempt
claim for a refund filed in connection with stat interest or penalties
representing client in judicial proceedings
IRS challenge of original or amended tax return

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2
Q

realistic possibility

A

33-50% do not have to be disclosed

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3
Q

ssts 7

A

written advice for complicated matters not required

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4
Q

reasonable basis

A

> 20% chance must be disclosed

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5
Q

substantial authority

A

> 40% chance of being sustained

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6
Q

Restatement View

A

majority view of accountants liability to a limited class of actually foreseen users

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7
Q

scienter

A

whether or not one has a guilty mind ie intent to decieve

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8
Q

ultramares rule

A

allows recovery by third party if privity of contract between accountant and third party-only in some jurisdictions requires privity before accountant liable fr

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9
Q

reasonably foreseeable

A

all that is required for fraud

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10
Q

3 approaches to liability

A

privity approach of ultramares vs touche
restatement “limited class”
reasonable foreseeability

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11
Q

RICO

A

racketeer influenced corrupt org act-requires conduct of an enterprise through pattern of racketeering activity

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12
Q

Common Law

A

Real Estate and Services

based on case decisions-needs more detail to be valid contract

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13
Q

UCC

A

sale of goods or goods and services combined

codified

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14
Q

Quasi-contract

A

imposed by law-no actual contract

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15
Q

implied in fact contract

A

based on conduct of parties

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16
Q

void contract

A

violates law

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17
Q

bilateral/unilateral contract

A

promise in exchange for promise or act(unilateral)

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18
Q

voidable contract

A

option to avoid liability

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19
Q

enforceability classifications

A

valid, void, voidable, unenforceable

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20
Q

express contract

A

formed wholly by oral and/or written words

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21
Q

firm offer

A

merchant, signed writing, open for stated period

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22
Q

Sight draft

A

payable on demand

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23
Q

Time Draft

A

specific time

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24
Q

Trade acceptance

A

draft drawn on buyer’s bank

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25
Q

elements for negotiable instruments

A

writing, signed, unconditional, sum certain in money, payable on demand or definite time and words of negotiability (order or bearer)

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26
Q

not affecting negotiability

A

contradictory terms, omission of date, postdating or antedating, collateral, presence of guaranty

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27
Q

draft vs. order

A

draft 3 parties, order 2 parties

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28
Q

promissory notes vs COD vs check

A

must be payable to order or bearer, check does not

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29
Q

requirements for HDC

A

must be holder, take instrument for value, in good faith and without notice that instrument is overdue, previously dishonored or of any claim of defense

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30
Q

securities act of 1933-initial offering intrastate

A

if issuer makes offering in own state to residents of that state registration not necessary. 80% of funds used must be in that state

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31
Q

Accountant liability

A

never excused for malpractice

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32
Q

Actions by BOD without SH approval

A

purchasing assets of another corporation

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33
Q

DRD

A

less than 20% int-70%DRD
more than 80%-100%DRD
limited to taxable income only-not whole div

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34
Q

legal expense deduction-to collect taxable income, ie alimony

A

2% of AGI

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35
Q

Accumulated earnings credit & tax

A

$250,000 + divs paid within first 2 1/2 months of corps tax year, 15%

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36
Q

Statute of Frauds- # of docs

A

may be in multiple docs as along as related to same agreement

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37
Q

SSTS 1-tax docs to consider

A

treatises, well-reasoned articles, IRS general counsel memos

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38
Q

RPM-resale price maintenance

A

judged by rule of reason standard-more rare to find practices illegal

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39
Q

% employees to hold election for union

A

30 %

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40
Q

realized gain in partnership sale of assets

A

lower of realized or built-in

41
Q

ending apparent authority

A

must give public notice to all businesses not just existing

42
Q

suspended passive losses

A

no CB on CF

43
Q

implied warranty of merchantability

A

can be disclaimed orally or in writing with word merchantibility otherwise automatically assumed

44
Q

accrual-tax vs books

A

tax is claimed when amount determined and going to receive

45
Q

ethical complaints with national implications

A

AICPA handles

46
Q

liability for material misstatements in reg statements

A

CPA is strictly liable must prove acted with due diligence and plaintiff did not rely

47
Q

order of payment-bankruptcy

A

security interests, taxes, general creditors

48
Q

use of cash basis-partnership

A

always unless no partner is a corporation

49
Q

realistic possibility position

A

no disclosure

50
Q

2% of AGI deductions

A

tax prep, unreimbursed job expenses, other misc

51
Q

corporate NOL

A

CB 2, CF 20

52
Q

breached of contract-wronged party

A

damages or performance not both

53
Q

foreign IT paid by corp

A

option of deduction or credit

54
Q

child and dependent care credit phaseout

A

35% if AGI less than 15000, reduced 1 % for each 2000 increment, min is 20%

55
Q

Guaranty under statute of frauds

A

must be in writing signed by guarantor

56
Q

LLP

A

multiple owners, corporate owners, and pass through taxation, s corps cannot have corporate owners

57
Q

involuntary bankruptcy petition

A

stops enforcement of judgement liens against property

58
Q

generation-skipping tax

A

flat tax equal to maximum gift and estate tax rate more than one generation below generation of donor

59
Q

denial of discharge in bankruptcy

A

refusal to explain loss of assets, fraud, concealment of assets, 8 years

60
Q

2% miscellaneous deduction

A

tax prep fees, custodial fees, profeesional pubs. union dues

61
Q

Holder in due course defenses under negotiable instruments article of UCC

A

material alteration, discharge in bankruptcy, not breach of contract-only ordinary holders

62
Q

more likely than not

A

over 50 % for tax shelters

63
Q

partnership basis in assets contributed by partners

A

same as partners basis

64
Q

gain recognized on corporate formation

A

to extent that liabilities assumed exceed basis in assets contributed

65
Q

agreements between merchants do not need to be in writing

A

not objected to in writing win 10 days

66
Q

interest on state government obs

A

not taxable

67
Q

debtor requirements for discharge

A

must attend all hearing subject to bankruptcy proceedings

68
Q

gain on sale in partnership

A

capital gain equal to amount payment exceeds basis

69
Q

private foundation filing

A

990PF

70
Q

consolidated corp return

A

members of affiliated 80% or more group

71
Q

taxation of distributions of retirement

A

fully taxable if no basis-earnings not taxed

72
Q

no capacity for agency relationship

A

unincorporated association-not an individual or entity

73
Q

TRP

A

must be paid to prepare or hire people to prepare substantial portion of tax return

74
Q

foreign income

A

excludable from us income-no credit on taxes paid

75
Q

negotiability of instruments

A

must be payable at definite time

76
Q

disclosures in non wksi issuers reg

A

description of security, how proceeds will be useddescription of business and mgmt, and FS

77
Q

bankruptcy confidentiality

A

cannot disclose names

78
Q

privity of contract and securities act

A

not required

79
Q

distribution of appreciated property

A

increases corporations earnings and profits by diff in FMV and AB

80
Q

Acocuntant-client privileges

A

about 15 states and limited congress

81
Q

anti-fraud provisions act 1934-CPA liability

A

defenses are lack of knowledge and acting in good faith

82
Q

liability when agents acts for undisclosed principal

A

principal not liable if agents acts outside actual authority

83
Q

gain realized on acquired property

A

only to extent of gain exceeding disallowed loss by person who gave

84
Q

real property

A

governed by common law

85
Q

loss on s corp

A

only deducted to extent of basis

86
Q

AMT

A

add back state and local income tax and and misc deductions that exceed 2%

87
Q

Gift tax return

A

April 15th of year after gifted

88
Q

express warranties

A

do not need to use promise or warrant, just part of basis between buyer and seller

89
Q

RMBCA

A

allowed to serve as officer and director if not otherwise stated, may indmemnify officers

90
Q

Income for PHC

A

interest earned on tax-exempt obs is excluded from income

91
Q

ECG

A

review of reg stmt by SEC and reduced requirement for audited F/S

92
Q

S corp

A

basis not affected by debt of corp

93
Q

Cash basis

A

if over 12 months expense must be spread over time

94
Q

Sales article of UCC-liquidated damages

A

seller may keep 20% or 500(less) of purchase price if buyer defaults

95
Q

organization expenses

A

limited to 5000 reduced by amount over 50000, rest is amortized over 80 months

96
Q

negotiable note

A

in writing and signed by maker
unconditional promise to pay money
payable to bearer
on demand or at definite time

97
Q

net losses in excess of AT-RISK amount

A

suspended and carried forward without expiration and deductible against that activity

98
Q

EE u.S savings bonds

A

made purchase after reaching age of 24 and sole owner

99
Q

Sales article of UCC-implied warranty of fitness

A

seller knows purpose buyer will use goods and buyer relying on sellers knowledge

regulation (25 decks)

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