R5 - Ethics

Question 1

marketed opinion

Answer 1

• marketed opinion is advice that will be used to “promote, market or sell” a partnership, investment plan or arrangement.

Exception - markteted opinion does not include written advice.
NO - listed transactions
No - any partnership or any other entity for tax avoidance or evasion. (Tax shelter)

the advice must disclose that it was not intended to be used and cannot be used to avoid penalty. it directs the taxpayer to seek advice from an independent tax advisor.

Question 2

tax preparer - negligent and intentional disregards

Answer 2

a compensated preparer is liable for a penalty if his understatement of taxpayer liability on a return for refund is due to negligent or intentional disregard of rules and regulations. A preparer is not required to obtain supporting documentation unless he has reason to suspect the accuracy of the taxpayer’s figures. however, the preparer must make reasonable inquiries if the taxpayer’s information appears incorrect or incomplete.

Question 3

what is the characteristic of a best practice in rendering tax advice?

Answer 3

establishing in a tax memo relevant facts, evaluating the reasonableness of assumptions and representations, and arriving at a conclusion supported by the law and facts.

Question 4

circular 230 - holding the check

Answer 4

cricular 230 does not prohibit a practitioner’s holding the check for sake keeping and awaiting the client’s return.

Question 5

disclose a conflict of interest

Answer 5

if tax preparer fail to disclose a conflict of interests, the IRS does not set forth any penalty.

Question 6

audit committee

Answer 6

public companies are required to establish an audit committee comprised of board members who are otherwise independent if the company.

the audit committee is directly responsible for the appointment, compensation, and oversight of the work of the public accounting firm employed by the public company.

Question 7

code of ethics for senior financial officers

Answer 7

promote -

1. honest and ethical
2. fill, fair, accurate and timely disclosures in periodic financial reports
3. compliance with laws rules and regulations.