(Solved) : You Are A Cpa Who Works For A Local Accounting . . .

You are a CPA who works for a local accounting firm. While having lunch at Willie’s Communication Skills Diner last Thursday, you overheard Beth Murray describe how Bart (her spouse) was able to get a $2,000 business loss, free car maintenance for 2 years, and $4,000 cash to spend on their vacation in exchange for an old truck. You didn’t think too much about the conversation until you returned to your office. While you were at lunch, Bart Murray dropped off the tax information for his business, Bart’s Mobile Glass Service, for the past year. Your curiosity gets the best of you. You open the packet of information and immediately look for the truck sale information. The only documentation you find is a handwritten memo stating, ”2005 Dodge truck sold for $4,000 and loss on sale = $2,000.” The memo is initialed by Bart Murray. Attached to it is a photocopy of a check from Haroldene Harvey’s Auto Castle, Inc., for $4,000. Haroldene Harvey is also your client. You know that Haroldene and Bart are neighbors and good friends. Your review of Bart Murray’s asset and depreciation schedules confirms that the truck had an adjusted basis of $6,000 as of the sale date. What are your obligations under the Statements on Standards for Tax Services? Write a memorandum to the managing partner explaining what should be done about the situation involving Bart Murray.

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