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Essay Available:
Pages:
2 pages/≈550 words
Sources:
4 Sources
Level:
APA
Subject:
Accounting, Finance, SPSS
Type:
Research Paper
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 12.64
Topic:

Audit Letter to IRS (Research Paper Sample)

Instructions:
You are a CPA and have been hired by a client who comes to you with a letter from the IRS indicating that it is auditing several items on client's tax return and make the following assertions. a. the method the client used to value foreign currency exchanges is incorrect. b. an undervalued international exchange of appreciated property should show a larger gain. c. sales through export operations were under-reported and revenue under-stated. d. the transfer of intangible property for stock was undervalued and results in a larger gain. e. investments made to another country were done through a subsidiary and not a branch and are taxable as such. 1. respond to the assertions by the IRS and counter those assertions with your own. Provide support for the rationale used in the response. 2. make a convincing argument that the information/documentation your client possesses justifies and supports the client's claim. Provide supporting evidence for your argument. source..
Content:
Response to IRS audit letter Name: Institution: Date: There is no prescribed valuation of foreign currency exchange rate by the IRS, but valuation method used has been applied consistently in line with the requirements of the IRS. Thus, the valuation used the prevailing market rates in translating the currencies. For instance those transactions appearing once were translated using the prevailing rate of the day and those taking place throughout the year occurred through an average currency exchange rate (Hoffman et al., 2010). In addition, the taxation of the foreign income takes into account the time of income realization. Thus, it is prudent to look into the aforementioned issues in the IRS audit report to avoid paying penalties on my part and clarify on taxation matters affecting foreign business operations. Taxation of increase in income is a long -held principle with the taxing of an asset appreciation a follow- up to this principle. Nonetheless, the taxing of an appreciated asset following international exchange also follows the realization requirement (Johnson et al., 2008). At the same time, this constituted mere transfer rather than sales. The IRS states that sale of appreciated property attracts capital gains tax, but the same i...
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