25. This question will test your ability to research a tax practice issue under Circular 230, which governs federal tax practice standards. You have prepared tax returns for both Sam John Monroe (brothers) for several years. John stops by your office with his tax return information. You have already filed Sams return for the year so you know that Sam purchased an office building for $100,000 from John this year. You deducted the correct amount of depreciation related to the building on Sams return. When you mention the sale to John, however, he tells you that he is not paying any tax on any gain related to the sale. John views the receipt of $100,000 from Sam as a nontaxable gift between brothers. You know that Johns interpretation is unlikely to be correct but John will not budge on the issue. Would it violate the Diligence as to Accuracy provision of Circular 230 if you sign the paid preparers declaration on Johns return? What is the specific Circular 230 section supporting your conclusion? Hint: Search in the IRS Publications area of Checkpoint.

a. Signing the return would violate the Diligence to Accuracy provision found in Section 10-22 of Circular 230.

b. Signing the return would violate the Diligence to Accuracy provision found in Section 10-6 of Circular 230.

c. Signing the return would violate the Diligence to Accuracy provision found in Section 10-30 of Circular 230.

d. Signing the return would not violate the Diligence to Accuracy provision found in Section 10-22 of Circular 230.