A Client Wants to Take a Tax Return Position with Less

question 73

Multiple Choice

A client wants to take a tax return position with less than a 10% probability of being upheld in court. The CPA should

• A)take the client's desired position, but not sign the tax return.
• B)inform the client that the position does not have a realistic possibility of success.
• C)ask the client to sign a waiver of his right to sue the CPA in the event the IRS disallows the position.
• D)take the client's desired position and sign the return as usual.

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Definitions:

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead costs.

Finished Goods Inventory

Inventory of finished goods awaiting sale but not yet purchased by consumers.

Raw Materials Inventory

The total cost of all parts and materials kept in stock by a company to be used in production.

Indirect Materials

Materials used in the production process but not directly traceable to a finished product, such as lubricants and cleaning supplies.