CPA Exam · Cheat Sheet
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Who practices? CPAs, attorneys, EAs, enrolled actuaries (limited scope).
| Duty | Consequence if Breached | |
| Due diligence — verify facts; don't ignore errors | Sanctions possible | |
|---|---|---|
| Competence — have knowledge or associate w/ expert | Sanctions possible | |
| Return client records — promptly, even if fees unpaid | Sanctions possible | |
| Advise of errors — inform client of noncompliance | Sanctions possible | |
| Confidentiality — no disclosure without consent | Sanctions possible | |
| Best practices (aspirational) — e.g., conflict checks | NO sanctions | |
| Violation | Threshold | Penalty |
| Unreasonable position (no substantial authority, no disclosure) | Not >~40% chance sustained | $1,000 or 50% income from return |
| Willful/reckless (intentional understatement) | Shows disregard | $5,000 or 75% income from return |
| Violation | Penalty per Return | Annual Cap |
| Fail to furnish copy, sign, provide ID #, retain copy | $50 | $26,500 |
| Fail to diligence EITC/CTC/AOTC/HOH | $600 | — |
| Negotiate refund check | $530 | — |
| Standard | Probability | Used When |
| Substantial authority | >~40% sustained | Normal positions; no disclosure needed if met |
| More-likely-than-not | >50% sustained | Tax shelters; reportable transactions (higher bar) |
| Frivolous | <~20% | Never take; no penalty relief |
| Return | Original | Extended |
| Form 1040 (individual) | April 15 | October 15 (6 mo) |
| Form 1120 (C corp) | 15th day of 4th mo after year-end | 15th day of 10th mo |
| Form 1120-S, 1065 (S corp, partnership) | March 15 | September 15 |
| Form 706 (estate tax) | 9 mo after death | 15 mo after death |
| Form 709 (gift tax) | April 15 | October 15 |
| Situation | Period | |
| Standard | 3 years from due date (or filing, if later) | |
| Omission of ≥25% gross income | 6 years | |
| Fraud or no return | Unlimited | |
| Collection of tax | 10 years from assessment | |
| Refund claim | Earlier of: 3 years from filing OR 2 years from payment | |
| Issue | UCC (Goods) | Common Law (Services, Real Estate) |
| Acceptance | Can add terms (merchant exception: material change) | Must mirror offer exactly |
| Modification | No consideration needed | Requires new consideration |
| Battle of forms | §2-207 applies | N/A |
| Term | Risk Passes to Buyer When | |
| FOB Shipping Point | Goods given to carrier → buyer bears transit risk | |
| FOB Destination | Goods tendered at destination → seller bears transit risk | |
| Warranty | Scope | Applies To |
| Express | Affirmations, descriptions, samples | Everyone |
| Merchantability (implied) | Fit for ordinary use; properly packaged | Merchant sellers only |
| Fitness for particular purpose (implied) | Fit for buyer's specific need (seller knew) | Anyone |
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Aligned to the AICPA CPA Exam Blueprints.
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