Flax, a sole proprietor, has been petitioned involuntarily into bankruptcy under the Federal Bankruptcy Code's liquidation provisions. Simon & Co., CPAs, has been appointed trustee of the bankruptcy estate. If Simon also wishes to act as the tax return preparer for the estate, which of the following statements is correct?
a. Simon is prohibited from serving as both trustee and preparer under any circumstances because serving in that dual capacity would be a conflict of interest.
b. Although Simon may serve as both trustee and preparer, it is entitled to receive a fee only for the services rendered as a preparer.
c. Simon may employ itself to prepare tax returns if authorized by the court and may receive a separate fee for services rendered in each capacity.
d. Although Simon may serve as both trustee and preparer, its fees for services rendered in each capacity will be determined solely by the size of the estate.
Answer: C
Tax
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