2. Rangin, a CPA, works for a large multinational corporation headquartered in N

Question

2. Rangin, a CPA, works for a large multinational corporation headquartered in New York City. Rangin is the primary preparer for her employer’s tax returns. During the past year, her employer engaged in a transaction in North Carolina. The employer has never previously filed a return in North Carolina. Upon doing her research on the reporting requirements for North Carolina, she concluded that based upon the North Carolina tax law, the transaction should most likely be reported on a North Carolina tax return for the year in which the transaction occurred. She also found a lower court case that one could argue that you would not have to report the income from the transaction in North Carolina. However, this position of the court case only has a “reasonable basis” for the position. Rangin decides that the corporation will not file a tax return in North Carolina. She concludes that since no return has or will be filed, there is little likelihood that the State of North Carolina tax authority will become aware of the transaction. Since no return was filed, there is no disclosure of the position taken on a tax return. What SSTS sections would possibly apply to this situation?

Explanation / Answer

Statement of Standard for Tax Services No. 1 Will be applied in this situation.

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