Question

Regarding proper ethical guidelines, which of the following is correct?

1) Under no circumstances should a question on a tax return be left unanswered.
2) If the exact amount of a deduction is not certain (e.g., around mid-600s), it should be recorded as an odd amount (i.e.,649) to increase the appearance of greater certainty.
3) Do not take questionable positions on a client's tax return in the hope the return will not be selected for audit by the IRS.
4) The use of client estimates in preparing a return is acceptable.
5) If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement.

Answer 1

Proper ethical guidelines in tax return preparation prioritize accuracy, honesty, and adherence to professional standards. It is important to address each statement within the provided options separately to determine if they are correct or incorrect.

Step-by-step explanation:

Proper Ethical Guidelines in Tax Return Preparation

When it comes to proper ethical guidelines in tax return preparation, it is important to adhere to professional standards and integrity. Let's address each statement:

1. Under no circumstances should a question on a tax return be left unanswered: This is correct. Leaving a question unanswered can result in penalties and inaccurate filing.
2. If the exact amount of a deduction is not certain, it should be recorded as an odd amount to increase the appearance of greater certainty: This is incorrect. Deductions should be recorded accurately, and falsifying information is unethical.
3. Do not take questionable positions on a client's tax return in the hope the return will not be selected for audit by the IRS: This is correct. It is important to avoid questionable positions to maintain ethical standards.
4. The use of client estimates in preparing a return is acceptable: This is correct. As long as the estimates are reasonable and based on accurate information, they can be used.
5. If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement: This is correct. If a client refuses to correct a mistake, it is best to disengage to maintain ethical standards.

Overall, ethical guidelines in tax return preparation prioritize accuracy, honesty, and adherence to professional standards.