A CPA prepares a client's tax return containing business travel expenses without inquiring about the existence of documentation for the expenses. Which statement best describes the consequence of the CPA's lack of inquiry?

A. The client will not owe an understatement penalty if the return is audited and the expenses disallowed.

B. The client will not be subject to a fraud penalty.

C. The CPA may be charged with preparing a fraudulent return.

D. The CPA may be assessed a tax return preparer penalty.

Question

Social Studies

Dempsey

6 September, 02:10

A CPA prepares a client's tax return containing business travel expenses without inquiring about the existence of documentation for the expenses. Which statement best describes the consequence of the CPA's lack of inquiry?

A. The client will not owe an understatement penalty if the return is audited and the expenses disallowed.

B. The client will not be subject to a fraud penalty.

C. The CPA may be charged with preparing a fraudulent return.

D. The CPA may be assessed a tax return preparer penalty.

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Answers (1)

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Esther · Answer 1

C

Explanation:

The CPA may be charged with preparing a fraudulent return. The CPA must show all the invoices or tickets and proof of expenses of his business travel expenses.