Tax

One of Suntan’s tax managers conducted a review of Winter Park’s prior year tax returns.

The review revealed that an MOL for a prior tax year was Incorrectly computed, resulting In an overstatement of MOL carjacks and carryovers to prior tax years. Apply the Statements on Standards for Tax Services (Stats) to the following situations. The Stats are in Appendix E of this text. A. Assume the incorrect MOL calculation does not affect the current years tax liability.

What recommendations (if any) should Susan make to the new client?

See SETS No. 6. According to Statements on Standards for Tax Services (SETS) No. 6, Susan should inform her client Winter Parks management promptly of the mistake discovered and the potential consequences for doing nothing after discovery. Advising Winter Park’s to fallen amended return would be the correct approach to take in this case. This advice may be given orally, however, Susan Is not allowed to Inform the IRS of the error without her client Winter Permanganate’s permission except when required y law.

B. Assume the IRS is correctly auditing a prior year.

What are Suntan’s responsibilities n this situation? See SETS NO. 6. Again, According to Statements on Standards for Tax Services (SETS) No. 6, Susan should inform her client Winter Parks management promptly of the mistake discovered and the potential consequences for doing nothing after discovery.

If Susan is representing Winter Park Corporation, she should request if Winter Park’s agrees, to disclose the error to the IRS as to the MOL. Susan is not allowed to Inform he IRS of the error without her client Winter Park’s management permission.

If Winter Park does not agree, she should consider whether to withdraw from representing them and whether to continue a professional or employment relationship with them. C. Assume the MOL carryover is being carried to the current year, and Winter Park does not want to file amended tax returns to correct the error.

What should Susan do in this situation? See SETS No. 1. Advising Winter Park’s to fallen amended return would be the correct approach to take in this case. According to Statements on Standards for Tax Services (SETS) No. , if after the recommendation, Winter Park Corporation does not want to file amended returns to correct the error, Susan as a certified public consultations consider whether to withdraw from the engagement and whether to continue a professional or employment relationship with them.

Furthermore, the standards also state that position does not comply with the standards or her recommendations. Again, Susan is not allowed to inform the IRS of the error without her client Winter Parks management permission.