• Describe the ethical considerations inherently involved in federal income tax preparation.

You have a small tax practice. Most of your clients are conservative and prefer to steer clear of gray areas in the tax law. However, a few of your highest paying clients like to push the envelope and are aggressively seeking ways to reduce their taxes or maximize their refunds. You are again faced with having to determine whether you can professionally and ethically prepare the client's tax return (as the taxpayer requests) so that both of you are comfortable signing it. It is important for you to handle your client's situation with care and tact. Otherwise, you risk losing their account, which would have a significant impact on your small tax practice

1. Dennison Mateo's grandparents passed away during the year. Dennison received a 1963 Chevrolet Corvette worth $150,000 from his grandpa. His friend told him he would have to pay taxes on the value of the car. He is not about to sell the car but has no cash available to pay the tax. He insists that you not claim the car on his tax return. He is sure the IRS will never know what his grandfather left him in his will.

write a properly formatted, professional letter to your client.

1. Provide an explanation of tax avoidance and tax evasion, including examples of each one.
2. Explain the role personal ethics play in preparing a taxpayer's return.
3. Determine and explain to the client whether their desired action would be considered tax avoidance or tax evasion.
4. Then, A brief explanation of the concern, including a brief summary of the applicable tax law. Or Specific recommendations you require in order for you to continue as their tax professional.