ACC565 Week 10 Discussion 1 and 2

1258 words 6 pages
ACC565 Week 10 Discussion 1 and 2

Discussion 1
Imagine a situation in which a client under audit by the IRS omitted $100,000 in income. From the e-Activity, examine the major factors relative to the omission by the client that would result in a criminal investigation, rather than a civil fraud proposal by the IRS.
Evidence of Fraud It must be noted that any such activity comes under fraud or an attempt to miscommunicate to the stakeholders of the company. But there hardly is any way left for the officials to figure out it was a fraud or not since no direct proof is left. It is possible that the omission of this amount might have resulted from a misstatement or by mistake and was not
…show more content…

companies. Propose a new tax law that will benefit the U.S. Treasury from the deferral of income from foreign subsidiaries and encourage the repatriation of the previously deferred income.
There are two types of subsidiaries of a company. It can either be domestic or can be in any other country and hence forming a foreign subsidiary. There are different rules for domestic as well as foreign subsidiaries of a company. It must be noted that a subsidiary with a country is just like expanding the company and is not treated more than that. For domestic subsidiaries, local tax laws are applied which are applicable to the parent company in that country. Domestic subsidiaries also play the role of manufacturing products to be supplied to foreign countries as well and hence, it can help in carrying out international trade as well. This is taken as an advantage by the parent company since it enables the parent company to avoid foreign country’s tax laws. The subsidiary of the company does not have to pay taxes in accordance with the foreign country’s laws. Furthermore, the parent company is able to differentiate its domestic liability from its international one given that the subsidiary’s financial statements are not merged with the parent’s financial statements. Another important aspect of this is that the income of the subsidiary operating in another country cannot be taxed unless it is converted into dividends. This allows the