Go to the website www.aicpa.org, then select the Research tab, then Standards, then Tax Standards. Make sure you locate Statements on Standards for Tax Services (SSTS). There are currently 7 standards Answer the following questions from SSTS.

Read SSTS No. 4, Use of Estimates. A client tells you that she sold $200,000 worth of Apple Stock in 2017, but that she lost her records of her cost basis of the stock due to a fire in her home. She tells you that she reconstructed her cost basis as best as she could, and that she estimates it to be $75,000.

After considering SSTS No. 4, explain if/how you can use the $75,000 estimate of cost basis on her tax return.  

Same general fact pattern as a., but assume that your client tells you to use $74,624 as the cost basis because it will appear more precise on the tax return than $75,000, and reduce his likelihood of examination by IRS. After considering SSTS No. 4, explain if/how you can use the $74,624 estimate of cost basis on her tax return.
Read SSTS, No. 6, Knowledge of Error. While preparing your client’s 2017 tax return, you discover an error in your client’s 2015 tax return that, if corrected, would cost your client an additional $25,000 in federal income tax. After considering SSTS No. 7, explain your course of action.