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Chapter 26 Homework Assignment Due Date October 13, 2014 CIRCULAR 230 HYPOTHETICALS Provide short answers (1-3 lines) for the following hypothetical situations. Present your homework in an organized and professional manner (i.e., assume you are in a tax department and this is your first assignment). Be sure to include the citation to the applicable Circular 230 section(s). For example, sec. 10.32 or 10.32. Malcom receives an Information Document Request (IDR) from the IRS for his books and records. Malcom picked up his books and records from his accountant and gave them to his uncle for safekeeping. You have filed a Form 2848, Power of Attorney, with the IRS and the Revenue Agent has sent you a copy of the IDR. What are your duties Sec. 10.20, states that the duties that I have are to provide and submit records or information in any matter before the IRS unless the expert believes in good faith and on reasonable grounds that the records are confidential. Donna was referred to you by her Family Law Attorney to prepare her current years return. Donna is an enrolled agent and is currently getting a divorce. She has unreported income of at least 75,000 for each of the past 3 years. What are your ethical duties Sec 10.21, my ethical duties are to advise my client of the noncompliance, error or omission of the unreported income. Then I must let Donna know of the consequences as provided under the code and regulations of such actions that she has done. In preparing a clients tax return for the current year, you discover the prior accountant made an error regarding the net operating loss (NOL). The error results in the NOL carryforward being 100,000 in excess of what the actual amount should be. You inform your client of the error. The client still wants you to prepare this years tax return using the incorrect 100,000 NOL carryforward amount. Can you do this Sec 10.22, due diligence is the reason I cannot do this because a legal requirement that need to be