Kaitlin Carlton, a CPA sole practitioner, prepares tax returns each year for approximately 100 clients.

Items 1 through 8 each represent an independent factual situation in which Kaitlin has prepared and signed the taxpayer's income tax return. For each item, select from the following list the correct response regarding Kaitlin's responsibilities. A response may be selected once, more than once, or not at all. Double-click the shaded cells to view and select from the abbreviated list of choices.

Kaitlin's action constitutes an act of tax preparer misconduct subject to the Internal Revenue Code penalty.

The Internal Revenue Service will examine the facts and circumstances to determine whether the reasonable cause exception applies; the good faith exception applies; or both exceptions apply.

Kaitlin's action does not constitute an act of tax preparer misconduct.