The Tax Return

1. REVIEW AND COMMENT

REVIEW

　　Brenda Sells prepared a tax return for the president of Purple Industries Inc., Harry Kohn. Later, the manager of the tax department at her accounting firm asked to see her. She found later that Vincent Dim, the manager would like to discuss on the tax return she prepared for Harry Kohn.

　　Vincent told Brenda that Harry was incensed when he was told that Brenda would like to report his winning from lottery. Brenda explained that all winnings from lottery must be reported as revenue, as it is stated clearly on the law. Brenda also told that there is no net tax effect on the report as Harry’s lottery loses exceed the gains. She doesn’t see any problem with it.

　　Then, Vincent told that her action might resulting them loss the trust from Harry Kohn. Furthermore, Kohn and Purple Industries Inc. are their largest client. If she proceed to do that, the 20 percent revenues from Kohn’s will ba vanish.

　　From the reading, we can see that Vincent asked Brenda to left out the winnings amount from the report. He would like Brenda to think and make her decision.

COMMENT

　　Vincent’s action is totally wrong. He wants Brenda to modify the report. Vincent asked Brenda to omit the lottery that their client, Harry Kohn won from the report. This is because Vincent doesn’t want to lose their largest client. Vincent’s action can be categorized as unethical as he want to left out important information to save his client. He is afraid that their annual profit will be decreasing as Purple Industries Inc, Harry Kohn’s company are contributing 20 precent of their revenues. Vincent and Brenda must find other solution on how to maintain their relationship with their company’s client as not reporting the lottery amount was against the law.

2. DISCUSSION

QUESTION 1

Assume that Brenda has no reason to doubt Vincent’s veracity with respect to the statement that it is ‘a one-time request’. Should that make a difference in what Brenda decides to do? Why or why not?

ANSWER

　　　　Based on the case, stated that Brenda is given a time by Vincent; who is a manager of the tax department, to consider whether to report or not upon the revenue that Mr. Kohn; president of Purple Industries, Inc., gained through wins money by playing the lottery. Referring to the Kohlberg’s Stages of Moral Development, it is obviously Brenda is trying to obey rules rather than obey order from the manager. Even she does not hesitate with Vincent’s statement that it is “a one-time request”, however, she ought to act based on what is right in the perspective of rules and authority. It is proven