Going totally cross eye here….
Identify the false statement below.
A. Thuy is the paid preparer of Form 1065 for Winter Wiggles, a partnership. She does not prepare the individual return for Thelma, who owns a partnership interest in Winter Wiggles. Thelma’s individual return includes pass-through earnings of $26,000 from Winter Wiggles. Thelma’s return also includes income from other sources consisting of $38,000 wages and $3,000 alimony. Thuy is not a tax preparer with respect to Thelma’s return.
Answer (A) is correct.
Regulation 301.7701-15 states that an individual is considered a preparer if the entries on one return affect an entry reported on the second return and represent a substantial portion of the return. The entry on the second report is not considered to be a substantial portion if the entry involves amounts of gross income that are (1) less than $10,000 or (2) less than $400,000 and also less than 20% of the gross income as shown on the return. The pass-through earnings of $26,000 from Winter Wiggles is greater than 20% of Thelma’s gross income and constitutes a substantial portion of the return.
B. Joachim provides tax assistance under a Volunteer Income Tax Assistance (VITA) program established by the Internal Revenue Service. Joachim is not a tax preparer.
C. Jonathan is the paid preparer of Form 1120S for Cow Bells, Inc., a small business corporation. He does not prepare the individual return for Jaime, a Cow Bells shareholder who does not work for Cow Bells but who has pass-through income of $600. Jaime’s return also includes $54,000 of income from other sources. Jonathan is not a tax preparer with respect to Jaime’s return.
D. “Prep Free” is an organization sponsoring a Volunteer Income Tax Assistance (VITA) program and provides free tax preparation through VITA. Prep Free is not a tax preparer for returns that it prepares through the VITA program it sponsors.
FAR 05/27/14; 786/110 - Done !
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