FC3 Flashcards
Reasonable Basis =
> 20% Chance
Realistic Possibility =
> 33% chance
Under what circumstances can a CPA recommend a tax position to a client?
- There’s a realistic possibility it will be sustained
or - A reasonable basis and it is disclosed
What things should a CPA never tell a tax client?
- This isn’t right, but the IRS never checks
2. This isn’t right, but we will use it to bargain the IRS down
What format should a tax preparers advice to a client be given in?
No Standard format required
When are written communications with client preferable?
for complicated or important matters
What is tax Preparers responsibility to inform IRS of error?
Member need not and can not without client’s permission.
What is the responsibility of a CPA regarding errors contained in a previously filed tax return?
Advise client of errors
Define Tax Return Preparer
person who is paid to prepare or retain employees to prepare a substantial portion or any federal tax return
T or F: A TRP can prepare tax returns as a fiduciary?
False
List unreasonable positions
- No “Substantial Authority” (40% chance) for position
- No “reasonable Basis” (20 % chance) for disclosed position
- Not “more likely than not” (50% chance) for tax shelter position.
What does JEEP stand for?
Joint Ethics Enforcement Program
List items that can cause ato expulsion from AICPA
- felony
- failure to file tax return
- filing fraudulent tax return
- aiding fraudulent tax return
Who grants CPA license?
State boards of accountancy
List priorities for following:
- Unsecured Vs Secured
- Secured Vs Secured
- Secured vs Perfected
- Perfected vs Perfected
- secured
- First to attach
- Perfected
- First to perfect
What parties to perfected security interests give priority to?
- Unsecured creditors
- unperfected secured parties
- subsequent lien creditors
- trustees in bankruptcy
- most buyers
What types of buyers takes precedence over perfected secured interests?
Buyers in ordinary course of business
What is the general rule of priority between 2 perfected security interests?
1st in time of perfection is first in right
What are debtor’s rights when debt is paid in full?
Debtor can demand that the creditor file a release of collateral
Explain what a breach of the peace is
A violation of the law in repossessing collateral, such as a trespass to take the property
Describe right of redemption
If the secured party is not allowed to keep the collateral in possession in full satisfaction of debt, until there is a sale the debtor or any other secured party has a right of redemption and by doing so can regain possession of collateral
List the rights of peaceful possession upon the debtor’s default
Possession without committing:
- Trespass
- Assault and/or battery
- breaking and entering
List order of distribution of proceeds from the sale of collateral
- Expenses in repossession, keeping, and resale
- Balance of debt owed to secured party
- junior lien holders who have made written demands
- debtor unless collateral is accounts or chattel paper
What is the purpose of the soldiers and sailors relief act?
Creditor cannot reposses goods from active duty military debtors
List rights upon possession by secured party
- secured party with proper notice to debtor and others and no objection can keep collateral in satisfaction of debt. cannot keep if it is consumer goods and debtor has paid 60% or more
- Can always sell in reasonable commercial manner
Describe the 60% rule as it relates to secured party
if collateral is consumer goods and 60% or more of the debt or price has been paid then creditor must sell the goods
