Public Practice - Who Paid the Land Transfer Tax? Prepared by W. Morley Lemon Gary Archibald...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Public Practice - Who Paid the Land Transfer Tax? Prepared by W. Morley Lemon Gary Archibald is owner of two companies, Arch Limited and Bald Corp. In 1992, Arch transferred land located in Ontario with a value of $2 million to Bald, although there was no registration of the title transferring the property from Arch to Bald. The transfer was effected by journal entries in both companies. Lisa Li Chong, the general service partner of Stevens, Levins and Co., forgot to tell Gary Archibald about the need to pay a land transfer tax on the transfer of the property. Archibald had asked Lisa if there was any tax to be paid and the partner had said no. Bill Robertson, a tax partner at Stevens, Levins and Co., reviews the file and realizes that a mistake has been made. He realizes that the land transfer tax should have been paid because the transfer was, in fact, effected by virtue of its having been transacted through the financial records of the two companies. He advises Lisa of the problem. In other words, the firm is aware of the problem although Gary Archibald is not. The partners of Stevens, Levins and Co. realize that they will probably have to pay the tax plus damages if the failure to pay the tax is ever discovered either through disclosure by Archibald or the accounting firm, or by an audit. The omission was the accounting firm's fault and not that of their client, Gary Archibald. In circumstances like this, it is usual for the accounting firm (when they believe they are responsible) to pay any costs incurred by the client. The accounting firm is further aware of the fact that the Ontario Ministry of Revenue is not likely to discover that the tax was not paid since the title transfer was not registered. They are further aware that if the problem does come to light, it is the client, Gary Archibald, and his two companies that will be criticized for not paying the tax, and not the accounting firm. Should the accounting firm tell the client and, if so, what should they say? Public Practice - Who Paid the Land Transfer Tax? Prepared by W. Morley Lemon Gary Archibald is owner of two companies, Arch Limited and Bald Corp. In 1992, Arch transferred land located in Ontario with a value of $2 million to Bald, although there was no registration of the title transferring the property from Arch to Bald. The transfer was effected by journal entries in both companies. Lisa Li Chong, the general service partner of Stevens, Levins and Co., forgot to tell Gary Archibald about the need to pay a land transfer tax on the transfer of the property. Archibald had asked Lisa if there was any tax to be paid and the partner had said no. Bill Robertson, a tax partner at Stevens, Levins and Co., reviews the file and realizes that a mistake has been made. He realizes that the land transfer tax should have been paid because the transfer was, in fact, effected by virtue of its having been transacted through the financial records of the two companies. He advises Lisa of the problem. In other words, the firm is aware of the problem although Gary Archibald is not. The partners of Stevens, Levins and Co. realize that they will probably have to pay the tax plus damages if the failure to pay the tax is ever discovered either through disclosure by Archibald or the accounting firm, or by an audit. The omission was the accounting firm's fault and not that of their client, Gary Archibald. In circumstances like this, it is usual for the accounting firm (when they believe they are responsible) to pay any costs incurred by the client. The accounting firm is further aware of the fact that the Ontario Ministry of Revenue is not likely to discover that the tax was not paid since the title transfer was not registered. They are further aware that if the problem does come to light, it is the client, Gary Archibald, and his two companies that will be criticized for not paying the tax, and not the accounting firm. Should the accounting firm tell the client and, if so, what should they say?
Expert Answer:
Answer rating: 100% (QA)
The accounting firm Stevens Levins and Co faces an ethical dilemma in this situation While they are ... View the full answer
Related Book For
Smith and Robersons Business Law
ISBN: 978-0538473637
16th edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
Students also viewed these law questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
According to Thomson Financial, last year the majority of companies reporting profits had beaten estimates. A sample of 162 companies showed that 114 beat estimates, 29 matched estimates, and 19 fell...
-
Prepare a 1,400 word paper in which you compare and contrast Abraham Maslow (Humanistic) theories to Carl Jung (psychodynamic) theories. Address the following items: Describe the role of personality...
-
Dexall Company recently had a fire in its store. Management must determine the inventory loss for the insurance company. Since the firm did not have perpetual inventory records, the insurance company...
-
The cumulative normal distribution can be approximated (to within about six decimal places) by the modified polynomial relation where Use this formula to find the value of a call option with...
-
Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes...
-
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety helmets. Your boss has asked you to perform a comprehensive analysis of the company's financial statements,...
-
Sharpe Cutter is a small company that produces specialty knives for paper cutting machinery. The annual demand for a particular type of knife is 100,000 units. The demand is uniform over the 250...
-
Consider a sheet nominally 0.8 mm thick with a 1% variation of thickness. (Some places are 0.808 mm and others are 0.792 mm thick.) How high would n have to be to ensure that in a tensile specimen...
-
The staples inside a stapler are kept in place by a spring with a relaxed length of 0.115 m. If the spring constant is 51.0 N/m, how much elastic potential energy is stored in the spring when its...
-
Suppose the current exchange rate for the Polish zloty is zl 2.94. The expected exchange rate in three years is zl 3.01. What is the difference in the annual inflation rates for the United States and...
-
Assume the government issues a semi - annual bond that matures in 5 years with a face value of $ 1 , 0 0 0 a coupon yield of 1 0 percent. What would be the price if the yield to maturity ( semi -...
-
What involvement do I normally have with financial statements? 2. Why is it important to understand how financial statements relate to business performance? 3. How would a Managerial Accounting and...
-
If a switch occurs from currency into deposits, what happens to the federal funds rate (central bank rate)? Use the supply and demand analysis of the market for reserves to explain your answer. Why...
-
The following transaction occurred in June 20188 for MYK Esp Placement Agency: (Check Figure Trial Balance Totals: $21,625.00) 2018 June 1 MYK Esp invested $10,000 cash in the placement agency. 3...
-
Provide examples of a situations in which environmental disruptions affected consumer attitudes and buying behaviors.
-
Sam Sharpe executed and delivered to Don Dole the following instrument: Knoxville, TennesseeMay 29, 2014 Thirty days after date I promise to pay Don Dole or order Five Thousand Dollars. The holder of...
-
Mitchell, Nelson, Olsen, and Parker, experts in manufacturing baubles, each owned fifteen of one hundred authorized shares of Baubles, Inc., a corporation of State X that does not permit cumulative...
-
Harold Pearsall and Joe Alexander were friends for over twenty-five years. About twice a week they would get together after work and proceed to a liquor store, where they would purchase what the two...
-
The longest-lived stars are those of (a) low mass. (b) high mass. (c) intermediate mass. (d) infinite mass.
-
Polaris is always directly over (a) the North Pole. (b) any location north of the equator. (c) the equator. (d) the South Pole.
-
After our Sun burns all the hydrogen in its core, it will become a (a) white dwarf. (b) black dwarf. (c) black hole. (d) red giant. (e) blue giant.
Study smarter with the SolutionInn App