dqs

Must be atleast 225 words long

DQ1

Respond to the Ethics Discussion Case at the end of chapter 13 in the textbook.

Assume that you are a CPA and a tax specialist. Your clients include Ale and

Grains, Inc., an S corporation, and Gustav and Heidi Lager, a married couple who

are shareholders and the operators of Ale and Grains. The S corporation has

expanded to include 100 qualified shareholders this year. Gustav and Heidi have

told you that they have just obtained a divorce. Both individuals will continue to

operate Ale and Grains for the ownership group, and neither party plans to dispose

of her or his ownership interest. They know that certain rules govern the number

of shareholders allowed in an S corporation, but they tell you not to be concerned

because only their mailing addresses will change. They refer to the doctrine of substance

over form and how it fits this situation. Write a letter to Gustav, Heidi, and

the other shareholders offering your advice. Refer to the AICPA Code of Professional

Conduct and the Statements on Standards for Tax Services (which can be

found at www.cengagebrain.com) where necessary.

DQ2

Respond to the Ethics Discussion Case at the end of chapter 14 in the textbook.

Waldo Corporation has recently retained your accounting firm to prepare its

income tax return. Art, the partner in charge of the engagement, has assigned you

the job of reviewing last year’s return and making recommendations on the preparation

of this year’s return. The only item of concern on the return is a $32,000

dividends received deduction that Waldo claimed on $40,000 in dividends it

received from a Swiss corporation in which it owns a 30% interest. Write a memorandum

to Art with your recommendation on the course of action your firm

should take regarding the dividends received deduction.