Sergio owns 100% of Penguin Corporation and has handled his own accounting records and tax preparation in
Question:
Sergio owns 100% of Penguin Corporation and has handled his own accounting records and tax preparation in previous years. He has prepared Penguin's Form 1120 for 2022 and would like you to review it because of several transactions that he is not sure how to handle. While reviewing his tax return, you notice that he has a deduction for charitable contributions that exceeds what is allowed for 2022?
Sergio has reported a deduction of 25% of taxable income before the charitable contribution deduction. The current law for 2022 indicates that the limit is 10% instead of 25%. What is your advice to Sergio? In addition to the chapter content, see Statements on Standards for Tax Services
at https://future.aicpa.org/resources/toolkit/statements-on-standards-for-tax-services , Circular 230 at www.irs.gov/tax-professionals/circular-230-tax-professionals.
What response would you prepare to partners of the firm?
Auditing An International Approach
ISBN: 978-1259087462
7th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley