Dick Adams wrote:
- quote -

Just when you think you've heard EVERYthing!

For a corporation who also uses a CPA to both prepare/audit financial
statements and prepare tax returns. there shouldn't be a problem,
right? After all, circular 230 trumps.

ChEAr$,
Harlan Lunsford, EA n LA

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On Tue, 14 Oct 2008 01:27:50 EDT, rdadams[at]panix.com (Dick
Adams) wrote:

- quote -

I think the most likely shortfall will result from companies
not filing in all the appropriate jurisdictions and all
appropriate taxes (use tax comes to mind). I would bet that
most small businesses file in only the company's home state.
Even though they have at least some out of state or out of
the country activity. T&E shouldn't be an issue because if
they have less than 1/3 chance it will upheld on audit then
the preparer should be omitting the T&E from the return.

I know that is a big assumption but the preparer shouldn't
be putting stuff on the return that she/he knows will almost
certainly be denied under audit.

- quote -

I think IRS will eventually get around to asking for the
accrual workpapers on small businesses, assuming the courts
allow it.

- quote -

I think it will depend on how the third party users react to
the departure disclosure. I doubt many owners want to pay
for a full analysis of the exposure. If the company has no
out of state or out of the US obligations it is ignoring
then it may not have anything to disclose. People who cheat
should be dropped by CPAs as clients so for ethical CPAs I
don't see poor/nonexistent documentation of T&E to be an
issue.

- quote -

--
Drew Edmundson, CPA
Cary, NC

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FASB Interpretation 48
Accounting for Uncertainty in Income Taxes:
An interpretation of FASB Statement No. 109

The AICPA just issued an update on FIN 48 with regards
to privately held companies. Hopefully someone more
familiar with FIN 48 will comment on this.

My interpretation of what I have read and discussed
discussed with a CPA in Tax practice is that FIN 48
applies to complitations. In essence, it requires
privately held companies to accrue for potential tax
liabilities should they be audited! The best example
is travel and entertainment expenses which are a
immediate target when a company is being audited.

Thinking as an auditor, I would ask to see the company's
compilation reports for the year under audit and ask
how the accrual was calculated. About the only palatable
explanation is "My accountant put it there. You'll have
to ask her/him." But that just opens a bag of worms.

The CPA with whom I discussed this said that since a
compilation is already a disclaimer, he would rather
add a footnote for a Departure from GAAP for not
disclosing potential tax liabilities.

The AICPA indicated that applying FIN 48 to S-Corps
and Partnerships is under discussion.

On one hand, I am always opposed to tax fraud. On
the other hand, FIN 48 is requiring the taxpayer to
disclose their estimate of their tax deductions and
their tax postions being disallow upon audit.

Dick

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >