R4

Question 1

R4
Confidentiality exceptions

Answer 1

1. court subpoenas/court proceedings
2. state CPA society quality control panels
3. Prospective purchasers, as long as the prospective purchasers do not disclose the confidential information.
4. AICPA/State Trial Board.
5. When GAAP requires disclosure of such information in the financial statements.

Question 2

R4
Possible Fees for Tax Preparer
Unreasonable Position
Willful or reckless conduct

Answer 2

Unreasonable Position = Greater of $1,000 or 50% of client fees

Willful or reckless conduct = Greater of $5,000 or 75% of client fees

Question 3

R4
Tax Return Penalties

Answer 3

1. failure to retain a completed copy
2. fails to sign a tax return
3. fails to furnish PTIN

Question 4

R4
Penalty for failure to pay sufficient estimated tax payments terms and penalty calculation

Answer 4

lesser of:
(a) 90 percent of the current year’s tax OR
(b) 100 percent of the prior year’s tax (110 percent if prior year’s AGI is more than $150,000)

Failure-to-Pay penalty = .5% * each month, up to 25%

Question 5

R4
The elements of a negligence claim are:

Answer 5

1. The defendant owed a duty of care to the plaintiff.
2. The defendant breached that duty of care.
3. The breach of duty was the actual and proximate cause of the plaintiff’s losses.
4. The plaintiff suffered damages.

Question 6

R4
What is the “Ultramares” rule for?

Answer 6

(i) parties in privity
(ii) intended “foreseen” third party beneficiaries