Criminal Fraud versus Civil Fraud and Taxation of U.S. Businesses Operating Abroad

“Criminal Fraud versus Civil Fraud and Taxation of U.S. Businesses Operating Abroad” Please respond to the following:

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. Based on the guidance in Circular 230, speculate as to which provision the CPA violated and the extent of any sanctions for CPA for not detecting the omission.

Based on the information contained in the textbook, a U.S. parent company does not include the income of a foreign subsidiary until the income is repatriated as dividends. Defend the creation of foreign subsidiaries as a mechanism to defer income of major U.S. companies. Propose a new tax law that will benefit the U.S. Treasury by accelerating income from foreign subsidiaries. Suggest potential tax saving strategies for the U.S. parent company to mitigate the impact to subsequent tax increases.

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