Reg - 3 Flashcards
Realistic Possibility
Positions with a realistic possibility of being sustained (essentially between 33% and 50%) need not be disclosed.
Realistic Possibility - takes into account
Well-reasoned articles
Tax treatises
IRS General Counsel Memoranda
Under which of the following circumstances must CPA Tax Advisor disclose the use of estimates for his clients
A. The taxpayer is ill at the time the return must be filed.
B. The taxpayer has not yet received a K-1 for a partnership in which she is a general partner.
C. The taxpayer is a major shareholder of a corporation that is tied up in bankruptcy.
Must an answer omission be disclosed?
If reasonable grounds exist to omit an answer, they need not be disclosed, says SSTS No. 2.
What test has the IRS adopted for tax shelters?
the “more likely than not” test
Unilateral Contract
can only be accepted by performing an act. It is a valid contract.
What governs real property interests, and does that include leases?
common law; yes
4 requirements for a valid contract:
- offer and acceptance
- consideration
- legal capacity
- legal purpose
executory contract
not fully performed
bilateral contract
a promise in exchange for a promise creating a contract
Indemnity Contract
A contract involving two parties in which the first party agrees to indemnify and reimburse the second party for covered debts or losses should they take place
Surety Contract
Surety agrees with the creditor to pay for the debt or default if the debtor does not
Surety
the party that agrees to pay the creditor if the debtor defaults
Third party beneficiary
when two parties make a contract that intends to benefit a third party
Cosureties
When 2 or more sureties agree to be sureties for the same obligation to the same creditor; they have joint and several liability
Does a surety fall under the Statue of Frauds
yes. surety contracts must be in writing
Right of contribution
Cosureties are liable in contribution for their proportionate shares of the debt. If a cosurety pays more than this amount, he may seek contribution for the excess from the other cosureties
Right of reimbursement
Is against the debtor to collect any amounts paid by the surety
Subrogation
when the surety pays the creditor, it “steps into the shoes of the creditor” and obtains the same rights against the debtor that the creditor had
Exoneration
If the debtor is able to pay, the surety may require the debtor to pay before the surety pays.
