1. Risk assessment procedures 2. Tests of internal controls 3. Substantive tests of transactions 4. Substantive analytical procedures 5. Substantive tests of details of balances   Media and function and remittance advice, invoice, customer order, sales order – definitions     Describe a control measure that would reduce likelihood Or 5 control measures and […]

Regulations -          The IRS’s and Treasury’s interpretation of the code -          Issued in the form of TD’s – Treasury Decisions -          Known as Proposed Regulations during hearings process -          Known as regulations once approved   Two forms of regulations -          General Regulations Issued under authority granted to the IRS to interpret the code -          Legislative […]

Civil penalty brings monetary fines Criminal penalty can be both and possibility for prison Failure to file 5% for every month from 04-15 through 08-01 Failure to pay – failing to pay the tax. Extensions to file do not mean extension to pay. ½ percent per month Interest rate on over and under payment is […]

Administrative Regulations and Rulings Regulations -          The IRS’s and Treasury’s interpretation of the code -          Issued in the form of TD’s – Treasury Decisions -          Known as Proposed Regulations during hearings process -          Known as regulations once approved   Two forms of regulations -          General Regulations Issued under authority granted to the IRS to interpret […]

Constitutional and Legislative Sources Civil war saw first income tax Pollock V Farmer’s Loan and Trust ruled that income tax was illegal Primary Sources -          Statutory Sources -          Constitution -          Treaties -          Internal Revenue Code Share this post!

Tax Planning After Tax cost = Before Tax cost x (1-marginal tax rate) Example:  Company A has a tax rate of 40% and is considering 2 options. Option 1: hire worker for $2,000 to set up tax avoidance plan which would save the company $1,600 in income taxes. 80% success rate. Option 2: Hire worker […]

Communicating Research Results   File Memorandum -          Organize fact, issues and conclusions -          Facilitate review of activities by  supervisors or colleagues -          Allow for subsequent examination   Initial determination is likely to be incomplete -          Taxpayers see things from just their side -          Taxpayers not trained in law -          Not all statutes of facts are […]

Tax Services and Periodicals   Tax Services Annotated tax services- organized by Internal Revenue Code Section number and compiled with an editors explanation and evaluation with the code section, court cases, and rulings as annotations. Also known as compilations.   Topical Tax Services- divide tax law into transactions and related topic matter in an organized […]

Tax Research Process Steps in the tax research process Establish the facts Identify the issues Locate authority Develop conclusions Communicate the recommendations Share this post!

Management of Corporations   Corporate Objectives Raise profits and shareholder gain Corporate Constituency Laws- broadens legal objectives of corporations beyond profits   Corporate Powers Laid out in statutes Model Business Corporation Act – MBCA – they can do anything individuals can do   Purpose Clauses in Articles of Incorporation MBCA allows any legal business to […]