Concept: This problem uses an algebraic manipulation similar to the identity \((x-y)^2 = x^2 - 2xy + y^2\). We are given an expression involving a term and its reciprocal, and we need to find the sum of their squares.
Step 1: Let \(x = \tan A\)
The given equation can be written as:
\[ x - \frac{1}{x} = 1 \]
We need to find the value of \(x^2 + \frac{1}{x^2}\).
Step 2: Square both sides of the given equation
Square the equation \(x - \frac{1}{x} = 1\):
\[ \left(x - \frac{1}{x}\right)^2 = (1)^2 \]
Expand the left side using the identity \((a-b)^2 = a^2 - 2ab + b^2\), where \(a=x\) and \(b=\frac{1}{x}\):
\[ x^2 - 2(x)\left(\frac{1}{x}\right) + \left(\frac{1}{x}\right)^2 = 1 \]
Step 3: Simplify the expanded equation
\[ x^2 - 2(1) + \frac{1}{x^2} = 1 \]
\[ x^2 - 2 + \frac{1}{x^2} = 1 \]
Step 4: Solve for \(x^2 + \frac{1}{x^2}\)
To isolate \(x^2 + \frac{1}{x^2}\), add 2 to both sides of the equation:
\[ x^2 + \frac{1}{x^2} = 1 + 2 \]
\[ x^2 + \frac{1}{x^2} = 3 \]
Step 5: Substitute back \(\tan A\) for \(x\)
Since we let \(x = \tan A\), then \(x^2 + \frac{1}{x^2} = \tan^2 A + \frac{1}{\tan^2 A}\).
Therefore,
\[ \tan^2 A + \frac{1}{\tan^2 A} = 3 \]
The value of \(\tan^2 A + \frac{1}{\tan^2 A}\) is 3. This matches option (1).