Reference no: EM132839772

Problem 1: Lambert is a member and prepares Shelton's personal tax returns. Amongst the information provided to Lambert by Shelton is an entertainment expense in the amount of $10,000 for season tickets to the local baseball team. Since Lambert has season tickets for the same team, attends all of the games, and sees Shelton at every game, she has reason to believe that Shelton attends all of the games with his wife Marie and thus does not use the tickets for business purposes. What are Lambert's obligations, if any, as the preparer of Shelton's returns as it relates to the $10,000 entertainment expense deduction?

A) Since tax return information is not audited, Lambert can sign the return without further inquiry.
B) Based on facts known to Lambert, she has an obligation to at least make reasonable inquiries regarding the $10,000 entertainment expense.
C) The knowledge that Lambert obtained was not part of her professional engagement with Shelton and thus Lambert has no obligation to inquire further into the matter.
D) Since tax preparers may rely in good faith, without verification, on information provided by the taxpayer, Lambert has no obligation to inquire further into the matter.