According to the AICPA Statement on Standards for Tax Services, if a CPA is preparing tax returns and recommending tax return position, which of the following statements is correct:
A. A CPA may recommend a position that the CPA concludes is frivolous as long as the position is adequately disclosed on the return.
B. A CPA may sign a tax return as preparer knowing that the return takes a position that will not be sustained if challenged.
C. A CPA will usually not advise the client of the potential penalty consequences of the recommended tax return position.
D. A CPA may recommend a position for which the CPA has a good faith belief there is substantial authority of being sustained if challenged.
Answer:D
According to the AICPA Statement on Standards for Tax Services, if a CPA is preparing tax returns and recommending tax return position, which of the following statements is correct:
A. A CPA may recommend a position that the CPA concludes is frivolous as long as the position is adequately disclosed on the return. B. A CPA may sign a tax return as preparer knowing that the return takes a position that will not be sustained if challenged. C. A CPA will usually not advise the client of the potential penalty consequences of the recommended tax return position. D. A CPA may recommend a position for which the CPA has a good faith belief there is substantial authority of being sustained if challenged.