CPA Ethics Practice Exam 2025 – Complete Prep Guide

The requirement for a taxpayer to adhere to tax treatment consented to in a previous administrative proceeding is guided by principles of tax law and administration. When a taxpayer has agreed to a particular tax treatment in a prior proceeding, they generally have an obligation to adhere to that treatment to maintain consistency with the IRS and avoid potential penalties or issues.

The correct perspective here is that taxpayers might not be strictly bound to a prior consent if they choose to adopt different treatment based on their current circumstances or if the law permits a change. Tax law can allow for adjustments in treatment as long as the change is justified and the taxpayer properly documents the reasoning behind it. Thus, the taxpayer has the discretion to choose differently based on their specific situation, which reflects the flexibility allowed within tax regulations.

This principle emphasizes the importance of understanding that while past consent may create expectations, it does not lock taxpayers into a single course of action without consideration of subsequent developments or relevant changes in law or individual circumstances.