Apply Circular 230 Standards Practice Test

A tax advisor is engaged for tax planning and proposes a series of transactions that could generate significant losses. The client asks the advisor to ignore certain unfavorable facts to make the plan “cleaner” in the written memo. Which action should the tax professional take to comply with Circular 230 standards for written advice and diligence?

In a tax preparation engagement, a tax preparer discovers that a client’s prior-year return (prepared by another firm) likely overstated charitable contributions by $9,500 based on receipts the client now provides. The client says, “Do not bring that up; it is already filed.” What is the most appropriate response under Circular 230 guidelines?