Question

According to the Statements on Standards for Tax Services, what belief should a CPA have before taking a pro-taxpayer position on a tax return?

A. The CPA should stand on the belief that his or her position might hold up in court if ever audited by the IRS.
B. The CPA should always take a pro-taxpayer position on a tax return since the primary duty is to the client, not the IRS.
C. The CPA should always take a pro-taxpayer position on a tax return as long as they believe they are in the ethical boundaries of their client's loyalty.
D. The CPA should have a good faith belief that his or her position has a realistic possibility of being sustained administratively or judicially on its merits if challenged.

Answer 1

According to the Statements on Standards for Tax Services, a CPA should have a good faith belief that his or her position has a realistic possibility of being sustained administratively or judicially on its merits if challenged before taking a pro-taxpayer position on a tax return.

Step-by-step explanation:

According to the Statements on Standards for Tax Services, a CPA should have a good faith belief that his or her position has a realistic possibility of being sustained administratively or judicially on its merits if challenged before taking a pro-taxpayer position on a tax return.

This means that the CPA should believe that their position is defensible and has a reasonable chance of being upheld in court if it were to be audited by the IRS.