You have been preparing joint returns and providing tax advice to Ashley and Jackson Turner for over 10 years. You also prepare the partnership return for Ashley and Jackson’s jointly owned LLC. Ashley recently called you and told you that she and Jackson have grown apart and are getting a divorce.
Ashley mentioned that she and Jackson each have their own attorneys. Ashley also told you that they have entered into a preliminary agreement for the divorce settlement and Ashley will buy Jackson’s 50% interest in the LLC for its fair market value. They have a 20-year-old son who is in college, and they have not yet agreed on who would claim him as a dependent. Ashley wants to know if you can provide tax advice on their filing status and continue to prepare their individual income tax return(s) and the partnership return.
Can you provide the services that Ashley has requested? What, if anything, should you do before providing such services?
Instructions:
Address these questions using the Treasury Department (IRS) Circular 230 (attached). In your discussion, state which standard from Circular 230 (Subpart B) may apply to this situation and what might result from applying the standard.
