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1-50. An ethical dilemma occurs when someone is faced with a situation in which there are no clearly defined answers such as by regulation or law.
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1-51. The major types of ethical reasoning are as follows:
- End-based ethical reasoning is where the ethical decision is the one that produced the most good for the largest number of people.
- Rule-based ethical reasoning was based on German philosopher Immanuel Kant’s idea that individual actions should be such that we would accept similar behavior from everyone else.
- Care-based ethical reasoning advises one to make decisions that would result in the treatment you yourself would like to receive.
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1-52. Professional ethical behavior is the result of the interaction of personal morality, social responsibility, business ethics, and other general ethical standards. When something is judged to be morally right or wrong (or good or bad), the underlying standards on which such judgments are based are called moral standards. The tax practitioner must be aware of social responsibility in areas such as environmental protection, equal opportunity, and occupational safety. Business ethics examines the moral and ethical problems that arise in a business environment. There is disagreement about whether a company has ethical responsibilities. Other ethical standards may include public policy, religious beliefs, and cultural values.
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1-53. Ethical issues involved in this case could include morality and business ethics. The moral issue involves the consideration of the “right thing to do” with respect to the plane ticket. The business ethics issues involve maintaining the integrity of the firm.
1-54. Unless the firm clearly allows staff to take home supplies (which likely would result in additional income to the staff members), this is clearly not ethical behavior. If Donna does work at home and the firm has clear policies allowing supplies to be taken home and used for work purposes, the behavior would be reasonable.
1-55. CPAs are in little danger of entering into the unauthorized practice of law as long as they avoid providing general legal services. The issue that arises is not whether CPAs are rendering legal services but how much legal service is provided. Because of the lack of guidelines on this issue, the federal agencies seem to have taken a lead in attempting to solve this problem.
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1-56. To avoid being charged with the unauthorized practice of law, the following activities should be avoided.
- Expressing a legal opinion on a nontax matter
- Drafting wills or trust instruments
- Drafting contracts
- Drafting incorporation papers
- Drafting partnership agreements
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EXERCISES
1-57.
- Subpart A, § 10.4(c)8: Eligibility for enrollment as an EA or enrolled retirement plan agent. Discussion of the criteria for enrollment before the IRS.
- Subpart B, § 10.21: Knowledge of client’s omission. Each attorney, CPA, EA, or enrolled actuary who knows that the client has not complied with the revenue laws of the United States or has made an error in or omission from any return, document, affidavit, or other paper shall advise the client promptly of the fact of such noncompliance, error, or omission.
- Subpart B, § 10.26 Notaries: A practitioner may not perform any official act as a notary public with respect to any matter administered by the IRS for which he or she is employed as counsel, attorney, or agent.