This is especially important because the codified economic substance doctrine imposes strict liability penalties on taxpayers, for which reasonable care and good faith is not a defense. He does not say to what charity he donated the money or when he donated the money. A tax return preparer is: any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this title or any claim for refund of tax imposed by this title.
Also, it may be useful to contact a practitioner in that jurisdiction who can assist with interpretations of existing statutes or regulations. For a disclosure to provide penalty protection, however, it must be adequate. A classic illustration of this comes from firms that use outside tax preparers during tax season.
This schedule and these forms may highlight issues for the IRS to audit, but they also generally provide additional protection against penalties, as do Revenue Procedure disclosures. He also did not advise the client on the matter. In response to the proposed regulations, some corporations have attempted to establish tax reserves, but financial auditors have refused to let them do so because proposed regulations are not binding authority.
For example, a client emails her CPA to ask about substantiation requirements for donating a car to charity. Additionally, an appellate court decision carries more weight than one of a lower court within its jurisdiction, as does a revenue ruling over a private letter ruling issued to a third party.
Nontax business reasons for a transaction may need to be specified and their basis stated.
It contains a valuable and useful overview of the most common tax return reporting standards and issues for determining whether a tax return position meets applicable reporting standards and disclosure requirements.
As the chart shows, the overall legal and ethical structure recognizes that significant uncertainty may be the norm, not the exception. All facts and circumstances, as well as authorities relevant to the tax treatment at issue, should be considered when determining whether a reporting standard has been satisfied.