Ralph's business records were lost as a result of Hurricane Katrina. CPA Jane prepares Ralph's return using estimates. What do the Statements on Standards for Tax Services state about the use of estimates?
A)Estimates may not be used.
B)Estimates may be used without disclosing their use to the IRS.
C)Estimates may be used, but Jane should disclose their use to the IRS.
D)The Statements on Standards for Tax Services do not address the use of estimates.

Question

Quizplus · Accepted Answer

The Statements on Standards for Tax Services allow for the use of estimates when records are lost, but it is important for CPAs to disclose the use of estimates to the IRS to ensure proper compliance with tax laws.

Ralph's Business Records Were Lost as a Result of Hurricane