Question

Is the use of a client's estimates permitted when preparing an income tax return?

1) True
2) False

Answer 1

The use of a client's estimates can be permitted under certain circumstances, but it is generally recommended to rely on accurate and verifiable information when preparing an income tax return.

Step-by-step explanation:

The use of a client's estimates can be permitted under certain circumstances when preparing an income tax return. However, it is generally recommended to only use the client's estimates as a last resort, when the necessary information is not available or cannot be obtained.

It is important to note that using a client's estimates may result in errors or inconsistencies, which could lead to penalties or audits from tax authorities.

Therefore, it is best practice to rely on accurate and verifiable information when preparing an income tax return.