Question

Waldo Corporation has recently retained your accounting firm to prepare its income tax return. Art, the partner in charge of the engagement, has assigned you the job of reviewing last year’s return and making recommendations on the preparation of this year’s return. The only item of concern on the return is a $32,000 dividends received deduction that Waldo claimed on $40,000 in dividends it received from a Swiss corporation in which its owns a $30,000 interest. Write a memorandum to Art with your recommendation on the course of action your firm should take regarding the dividends received deduction.

Answer 1

Answert Ethical scenarios Ais company w had recently retaned person t's accounting form in order to prepare income tau retelón person a partner in charged for appointments and he has assigned a job to person x to review the returns of last year and make some recommendations. The only item that is to be concerned on retum is that $32,000 of dividend received. Company W claimed deduction on $40,000 as dividend received from company 5. Company w holds $30000 on company's's shorre. interest Determine the memorandum for recommendation on course of dividends record deduction to person A: TO:Person A from: Person X Date! 08:33: 2015 Subject: recommendation on Carose of dividend received deduction,

A mistake occurred while entering dividend-received deduction for the company that is non-domestic. A domestic company is not allowed to enter dividendo received deduction on dividend received from the foreign Owned company. Hence, person A must inform to the dient about this mistake and advice about the treatment for improper deduction. The treatment is enderpyment of tane based on improper dedection, , person A must also inform the tempayer about the possible interest and penalties if there curs any understatement of income due to any mistakes, if client does not want person A to Coorect and' disclose about the mistakes then he can withdraw can also reeramine from the appointment. Person A weather he wants to continue the relationship with that dient or not professionally, However, certified public accountants are not allowed to disclose any of the client's croy on Prior yems of tau return to internal without the consent of bent, revenue Jervice

is clients refuses to disclose the mistake then person Service, A cannot reveal this information to internal revenue person A can disclose by violeting the cod of professional conduct, which is rue 301. This rule deals with certified pueblo accountants Confidential cient relationship, with regards person X Conclusione The certified public acealntants are allowed to disclose the mistakes and enrods done by then client while tox treatment. How ever, client can correct the mistakes of the refuse to disclose poior year's tone return. The ne 301. cellows the cec countents to keep the clients certified Public information confidential.