Rainbow Tax Service, Inc. - Page 8

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               Further, section 448(d)(2) requires only that the services             
          be in the “field of accounting” and is not limited to public                
          accounting.  Historically, tax return preparation and bookkeeping           
          services are regarded as within the field of accounting.                    
               Accounting has been defined as:                                        

                    the process of recording transactions in the                      
                    financial records of a business and                               
                    periodically extracting, sorting, and                             
                    summarizing the recorded transactions to                          
                    produce a set of financial records. * * *                         
                    [Blacks’s Law Dictionary 21 (8th ed. 2004).]                      

               Tax return preparation, which requires extracting                      
          information relating to financial transactions, analyzing that              
          information, and then summarizing and reporting that information            
          on a tax return, fits within the above general definition of                
               Also, as discussed above, section 1.448-1T(e)(5)(vii),                 
          Example 1(i), Temporary Income Tax Regs., supra, indicates that,            
          for purposes of section 448(d)(2), tax return preparation                   
          services are to be treated as accounting services.                          
               We note that under Nevada statutory law “public accounting”            
          includes “the preparation of tax returns”.  Nev. Rev. Stat. Ann.            
          sec. 628.023 (Lexis Nexis 2004).                                            
               We note further that a defining characteristic of our                  
          Federal income tax system is the reporting of financial                     

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Last modified: May 25, 2011