Question
Can someone please help??? For two scenarios below, answer the following questions: Which return would you sign and why is it okay to sign this
Can someone please help???
For two scenarios below, answer the following questions:
Which return would you sign and why is it okay to sign this return? Hint: You shouldnt sign any of these returns
Why wouldnt you sign the return? What is the tax code violation?
If you signed the return, what could happen to you as a tax preparer? What penalties apply for the tax preparer?
What types of taxpayer penalties apply?
How would you explain to your client why you would not sign the return and why they should change their position on what they want to put on the return? Remember they are NOT tax preparers; explain it so they will understand, back it up with IRS tax code or IRS filing rules and requirements.
This should be a minimum of 2 paragraphs per scenario: the first paragraph should address questions 1 4 and the last paragraph should address question 5. You can be more technical when answering the first questions; question #5 should be a response directed to your client(s).
1. Your clients, Adam and Amy Accrual, have a 21 year-old daughter named April. April is single and is a full-time student studying for her bachelors degree in accounting at Cal Poly Academy (CPA) in Pismo Beach, CA, where she lives with her roommates year-round. Last year April worked at a local bar and restaurant four nights a week and made $18,000, which she used for tuition, fees, books and living expenses. Her parents help April by sending her $300 each month to help with her expenses at college. This is all of the support given to April by her parents. When preparing Adam and Amys tax return you note they claim April as a dependent for tax purposes. Adam is insistent that they can claim April because of the $300 per month support and the fact that they have claimed April since she was born He will not let you take April off his return as a dependent.
2. For the last 10 years, you prepared the joint return for Dominic (husband; age 40) and Dulce (wife; age 35) Divorcee. Last year they got a divorce and remained as your separate clients. Under the dissolution decree, Dominic has to pay Dulce $2,500 per month alimony, which he does for the current year. You have completed Dominics tax return for the current year and you deducted the required alimony payments to Dulce on Dominics form 1040. Dulce came in to have you prepare her tax return and refused to report the alimony as income. She stated. I am not going to pay tax on the $30,000 from Dominic. She views the payments as a gift for putting up with him for all those years of marriage. Dulce will not budge on excluding this alimony from income.
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