Case Study: Haddock Corporation
Student’s Name
Institutional Affiliation
Case Study: Haddock Corporation
Often, there is a fine line between tax avoidance and tax evasion. While the former is legal, and the Preparer can pen a signature on the tax return, the latter is clearly fraudulent and legal, and can lead to a conviction in a court of law. The fact that the business owned by John pays inflated rent to him is seemingly suspicious and confusing and perhaps done to reduce distort its true income level and the tax bill owed to the IRS. However, the principle of separating the business from the owner reigns supreme in this situation, and points to a legal transaction between the two entities, the business and John. The minority partner in the business, wife of John backs the deal, and it is perhaps naive of the relationship between the two entities (McGuire, Omer & Wang, 2012). Since, the tax is fairly legal, and not fraudulent, signing of the document …show more content…
The AICPA Code of Professional Conduct rule 102 on integrity and objectivity clearly applies to this particular dilemma. The practitioner has a duty of informing the client of the immoral or unethical practice that the business is permitted (Gaumnitz & Lere, 2002). The rule boils down to integrity, and on this element, a practitioner is expected to preserve and extend public confidence, and hence conduct every other professional duties with a high sense of integrity. Integrity is an aspect of character essential to recognition, and a value from which the public trust obtains the standard against which a member must surely test every other
Student’s Name
Institutional Affiliation
Case Study: Haddock Corporation
Often, there is a fine line between tax avoidance and tax evasion. While the former is legal, and the Preparer can pen a signature on the tax return, the latter is clearly fraudulent and legal, and can lead to a conviction in a court of law. The fact that the business owned by John pays inflated rent to him is seemingly suspicious and confusing and perhaps done to reduce distort its true income level and the tax bill owed to the IRS. However, the principle of separating the business from the owner reigns supreme in this situation, and points to a legal transaction between the two entities, the business and John. The minority partner in the business, wife of John backs the deal, and it is perhaps naive of the relationship between the two entities (McGuire, Omer & Wang, 2012). Since, the tax is fairly legal, and not fraudulent, signing of the document …show more content…
The AICPA Code of Professional Conduct rule 102 on integrity and objectivity clearly applies to this particular dilemma. The practitioner has a duty of informing the client of the immoral or unethical practice that the business is permitted (Gaumnitz & Lere, 2002). The rule boils down to integrity, and on this element, a practitioner is expected to preserve and extend public confidence, and hence conduct every other professional duties with a high sense of integrity. Integrity is an aspect of character essential to recognition, and a value from which the public trust obtains the standard against which a member must surely test every other