Respond 2

Question 1

Annually the Internal Revenue Service (IRS) notifies taxpayers of potential scams and frivolous tax arguments that some tax preparers use to reduce their clients' tax liability.

Use the Internet to find information on one of these frivolous tax arguments and discuss their assertions as well as the IRS's position as to why these assertions are false. What is the general theme of these arguments? Why are these arguments clearly frivolous?

What would you do if you were approached by a potential client claiming one of these frivolous tax arguments?

Use the Internal Revenue Service's website at http://www.IRS.gov and search for "frivolous tax arguments". Be sure to discuss relevant tax laws and if possible, briefly discuss relevant case law.

Respond to this… When doing research for this topic I found several very interesting arguments.  None of which I would ever even consider trying.  I am sure that there are several people that use this one though, You may refuse to pay your taxes on religious or moral grounds by invoking the First Amendment.  It is true that there is an apportionment requirement in the Constitution for “direct taxes,” but the 16th Amendment clearly eliminates the apportionment requirement for all taxes on incomes.  Before the adoption of the 16th Amendment, the constitutionality of an income tax was determined under Article I, Section 9, Clause 4 of the Constitution, which states that:  “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”These arguments are wrong and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or disregard their responsibility to pay taxes.  The penalty for filing a frivolous tax return is $5,000. The penalty applies to anyone who submits a purported tax return or other specified submission, if any portion of the submission is based on a position the IRS identified as frivolous in Notice 2010-33, 2010-17 I.R.B. 609 or reflects a desire to delay or impede administration of the tax laws.

References:

Sahadi, Jeanne, Don't file a frivolous tax return, cnnmoney.com,  February 10th, 2015, http://money.cnn.com/2015/02/10/pf/taxes/frivolous-tax-returns/

Question 2

Conduct research on the history of the IFRS. In your own words, describe your understanding of why the IFRS was created, and how this will affect the accounting profession in terms of business relationships. Is this going to be seen as a positive change or will it present challenges? Explain.

Respond to this… I understand that the IFRS was created because in today world there and less boundaries and there needs to be some sort of standard that people can believe in.  People want to invest in new markets in places in the world that are just becoming developed, as there are great opportunities to make money.  I think that in the long run it will help business relationships but there are always going to be concerns.  One major challenge is that countries sometimes operate in very different ways then we in the US do.  Here is is unacceptable and illegal to pay bribes and give kickback to get things done faster with in our communities and governments,  In other parts of the world it may or may not be illegal but it is expected and a part of every day business, how does one account for items like this.   I think when it comes down to it you need to be comfortable and understand who and where you are investing and doing business.  With great opportunity also comes the possibility of great risk. 

Question 3

Explain the concept of the Time Value of Money (TVM). Does the TVM generally imply that "money today" is worth more than "money tomorrow"? Please explain, providing one or more examples that apply the concept of TVM.

Respond to this… The time value of money theory states that a dollar that you have in the bank today is worth more than a reliable promise or expectation of receiving a dollar at some future date. You can invest the dollar today and earn a return on that investment, such as interest or dividend payments.  The time value of money tells us what the present value of an investment will grow to by a given date. This is its future value. The difference between the present value and the future value depends on how many compounding periods are involved in the investment, and on the interest rate. Future value calculations can tell you how much money you will have in three years if you put $15,000 in a savings account today that pays 5 percent interest compounded annually.  When investors buy bonds or pay money into an interest bearing account, they are exchanging that money for a promise of more money on a certain date. The theory of the time value of money allows investors to use a mathematical formula, called risk free rate of return, to calculate today's value of that future money, and decide whether it is worth investing.

References:

Magloff, Lisa, Define "Time Value of Money, Chron.com, Demand Media, http://smallbusiness.chron.com/define-time-value-money-876.html, n.d.