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11. A brand new client takes salary advances from his professional corporation, showing them as loans...

11. A brand new client takes salary advances from his professional corporation, showing them as loans throughout the year. In December of every year, he shows the amount as salary and pays the taxes. As the new CPA you are aware that this is fairly common, but, if audited, the IRS would probably assess penalties.
What ethical issues does this present? Does the precedent of the prior CPA factor into your decision as to how you would handle this situation?

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