Tax Accounting II Case Essay Example | Topics and Well Written Essays - 500 words

Tax Accounting II Case - Essay Example Schneider as his tax professional in the latest filing of his income tax returns.1 The accountant may be considered to have knowledge of things done in the past about deducting the cost of artwork as part of deductible expenses. As to whether there could be tax assessment by IRS because of possibly underreported income due to higher reported expenses in the past, the same should be viewed as tax avoidance because there was really no intention to avoid or cheat on taxes. Moreover, it could be inferred from the case fact that claiming the cost of artworks as deductible business expense is allowed if treated or given as a kind of employee compensation.2 The difference between tax avoidance and tax evasion is that the former is legal as a way to reduce tax but the latter is against the law because there is an intention to defraud the government for the correct payment of taxes. In the case of Mr. Conor, he did not intend not to pay taxes, he claimed in good faith the cost artwork as business expense with the presumed knowledge of the accountant although the latter failed to object in previous years. In tax avoidance, which is a legitimate minimizing of taxes, the taxpayer should use methods approved by the IRS.3 Mr. Conor was only lacking in knowledge of method on how deduction could be made legitimate. Thus his CPA said that expense is allowed if given as employee compensation. It would have been tax evasion if Mr. Conor was not allowed at all to have claimed as expense the cost of artworks. The same would amount to reporting expenses that are not allowed and thereby understating income and the related tax. The fact also that half of the cost of artwork was now claimed in the latest tax return with the consent of the CPA should support the argument that the method used earlier was an allowed by and therefore a tax avoidance was more applicable than tax evasion.4 This researcher views that Mr. Schneider has not fully complied with the professional norms of