Martina advises her tax client, Breslin Baked Goods, to disclose a matter by attaching

Copyright 2014–2015 AICPAUnauthorized Copying Prohibited5-24Review Questions5.Martina advises her tax client, Breslin Baked Goods, to disclose a matter by attaching aspecial form to its corporate tax return. Breslin refuses and threatens to replace Martina withanother CPA. Which of the following statements best describes what Martina should dounder the tax profession’s ethics standards in this situation?a.Consider whether to withdraw from the engagement and re-evaluate the relationship.b.Terminate the engagement and report Breslin to the IRS Office of ProfessionalResponsibility.c.Draft a memo for the files indicating that Breslin is a difficult client.d.File the return in the manner specified by the client (without the disclosure).6.Jodie prepared Form 1040, including a Schedule C, for her client Richard, a sole proprietor.Which of the following statements best describes her obligations under SSTS No. 7,Formand Content of Advice to Taxpayers?a.She should communicate with Richard about subsequent developments affecting herprevious advice, even if she is not contractually obligated to do so.b.She should employ judgment in determining the form and content of her advice toRichard, even if the IRS or other regulators have specific requirements.c.Her advice should always comply with the standards in SSTS No. 1,Tax ReturnPositions.d.Her advice to Richard should always be in writing, and consented to by him.7.Jon provides Robin, a tax manager at SemperBarnes, his tax documentation, whichsubstantiates several large tax deductions he plans to take for the current tax year. Because ofwork Robin performs on one of Jon’s companies, she suspects that one of the deductions heis claiming may be significantly overstated. What are Robin’s ethical responsibilities in thisinstance?a.Robin should discuss the matter with Jon, first obtaining consent from any otherapplicable parties regarding possible confidentiality of the information.b.Robin should ignore the information that Jon provided her and instead prepare the taxreturn on the basis of other information known to her.c.Both the IRS and the AICPA rules indicate that a preparer may accept informationprovided by the client without verification, so she should prepare the return based onJon’s information.d.Since Jon is ultimately responsible for all of the deductions claimed in the return, Robinshould request indemnification from him against possible future penalties.

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