Question 1

Tax evasion is a legal activity that forms the basis of the basic tax planning strategies discussed in class.

Accepted Answer

A) True 
 B)False

Question 2

The goal of tax planning generally is to:

Accepted Answer

A)   Minimize taxes
B)   Minimize IRS scrutiny
C)   Maximize after-tax wealth
D)   Support the Federal government
E)   None of theseF) A) and D)
G) B) and D)

Question 3

The business purpose, step-transaction, and substance-over-form doctrines may limit the income shifting strategy.

Accepted Answer

A) True 
 B)False

Question 4

The assignment of income doctrine is a natural limitation to the timing strategy.

Accepted Answer

A) True 
 B)False

Question 5

Lucinda is contemplating a long range planning strategy that will allow her to defer sizable portions of her income for 10 years. What type of planning strategy is she contemplating? What are some potential risks associated with this type of strategy?

Accepted Answer

Lucinda is contemplating a long-term tim...

Question 6

A taxpayer paying his 10 year old daughter $50,000 a year for consulting likely violates which doctrine?

Accepted Answer

A)   constructive receipt doctrine
B)   implicit tax doctrine
C)   substance-over-form doctrine
D)   step-transaction doctrine
E)   None of theseF) B) and D)
G) A) and B)

Question 7

An astute tax student once summarized that many of the tax planning strategies merely make use of the variation of taxation across different dimensions. Explain why this is true. Be specific.

Accepted Answer

The three basic tax strategies discussed...

Question 8

The present value concept becomes more important as interest rates increase.

Accepted Answer

A) True 
 B)False

Question 9

When considering cash inflows, higher present values are preferred.

Accepted Answer

A) True 
 B)False

Question 10

Rodney, a cash basis taxpayer, owes $40,000 in tax deductible consulting fees for his business. Assume that it is December 28 and that Rodney can avoid any finance charges if he pays the accounting fees by January 10th. Rodney's tax rate this year is 30% and his after-tax rate of return is 10%. At what tax rate next year, will Rodney be indifferent between paying the $40,000 this year and next year?

Accepted Answer

If Rodney pays the $40,000 in December, ...

Exam 3: Tax Planning Strategies and Related Limitations

Tax evasion is a legal activity that forms the basis of the basic tax planning strategies discussed in class.

Correct Answer
verified

The assignment of income doctrine is a natural limitation to the timing strategy.

Correct Answer
verified

Lucinda is contemplating a long range planning strategy that will allow her to defer sizable portions of her income for 10 years. What type of planning strategy is she contemplating? What are some potential risks associated with this type of strategy?

Correct Answer
verified
Lucinda is contemplating a long-term tim...
View Answer

When considering cash inflows, higher present values are preferred.

Correct Answer
verified

An astute tax student once summarized that many of the tax planning strategies merely make use of the variation of taxation across different dimensions. Explain why this is true. Be specific.

Correct Answer
verified
The three basic tax strategies discussed...
View Answer

The goal of tax planning generally is to:

Correct Answer
verified

The business purpose, step-transaction, and substance-over-form doctrines may limit the income shifting strategy.

Correct Answer
verified

Correct Answer
verified
If Rodney pays the $40,000 in December, ...
View Answer

A taxpayer paying his 10 year old daughter $50,000 a year for consulting likely violates which doctrine?

Correct Answer
verified

The present value concept becomes more important as interest rates increase.

Correct Answer
verified

Exam 3: Tax Planning Strategies and Related Limitations

Tax evasion is a legal activity that forms the basis of the basic tax planning strategies discussed in class.

Correct AnswerverifiedShow Answer

The assignment of income doctrine is a natural limitation to the timing strategy.

Correct AnswerverifiedShow Answer

Lucinda is contemplating a long range planning strategy that will allow her to defer sizable portions of her income for 10 years. What type of planning strategy is she contemplating? What are some potential risks associated with this type of strategy?

Correct AnswerverifiedLucinda is contemplating a long-term tim...View AnswerShow Answer

When considering cash inflows, higher present values are preferred.

Correct AnswerverifiedShow Answer

An astute tax student once summarized that many of the tax planning strategies merely make use of the variation of taxation across different dimensions. Explain why this is true. Be specific.

Correct AnswerverifiedThe three basic tax strategies discussed...View AnswerShow Answer

The goal of tax planning generally is to:

Correct AnswerverifiedShow Answer

The business purpose, step-transaction, and substance-over-form doctrines may limit the income shifting strategy.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIf Rodney pays the $40,000 in December, ...View AnswerShow Answer

A taxpayer paying his 10 year old daughter $50,000 a year for consulting likely violates which doctrine?

Correct AnswerverifiedShow Answer

The present value concept becomes more important as interest rates increase.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Lucinda is contemplating a long-term tim...
View Answer

Correct Answer
verified

Correct Answer
verified
The three basic tax strategies discussed...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If Rodney pays the $40,000 in December, ...
View Answer

Correct Answer
verified

Correct Answer
verified