DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
Pearson'sbFederalbTaxationb2021:bComp.,b34eb(Rupert/Anderson)b
ChapterbC1: TaxbResearch
LO1:b b OverviewbofbTaxbResearch
1) Taxbplanningbisbnotbanbintegralbpartbofbopen-
factbsituations.bAnswer:b FALSE
Explanation:b Itbisbintegral.b
PagebRef.:b C:1-
2bObjective:b 1
2) Whenbabtaxpayerbcontactsbabtaxbadvisorbrequestingbadvicebasbtobthebmostbadvantageousbwaybtobd
isposebofbabstock,bthebtaxbadvisorbisbfacedbwith
A) abrestricted-factbsituation.
B) abclosed-factbsituation.
C) anbopen-factbsituation.
D) abrecognized-
factbsituation.bAnswer:b C
Explanation:b Advicebbeforebtransactionbisbopenbfactbsituation.b
PagebRef.:b C:1-2
Objective:b b 1
3) Investigationbofbabtaxbproblembthatbinvolvesbabclosed-factbsituationbmeansbthat
A) thebclient'sbtransactionsbhavebalreadyboccurredbandbthebtaxbquestionsbmustbnowbbebresolved.
B) thebclient'sbtaxbreturnbhasbyetbtobbebfiled.
C) futurebeventsbmaybbebplannedbandbcontrolled.
D) researchbisbprimarilybconcernedbwithbapplyingbtheblawbtobthebfactsbasbtheybexist.b
Answer:b A
Explanation:b Afterbthebfactbrequestbisbabclosedbfactbsituation.bPa
gebRef.:b C:1-2
Objective:b b 1
4) Explainbthebdifferencebbetweenbabclosed-factbandbopen-factbsituation.
Answer:b Inbabclosed-
factbsituation,bthebtransactionbhasboccurredbandbthebfactsbarebnotbsubjectbtobchange.bInbanbopen-
factbsituation,bthebtransactionbisbinbthebformativeborbprojectedbstage,bandbthebtaxpayerbisbablebtobstruc
turebthebfactsbsobthatbthebtaxbconsequencesbofbthebtransactionbcanbbebmorebfavorable.
PagebRef.:b C:1-
2bObjective:b 1
1
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
5) Inballbsituations,btaxbconsiderationsbarebofbprimarybimportance.bDobyoubagreeborbdisagree?b
Supportbyourbanswer.
Answer:b Itbisbimportantbtobconsiderbnontaxbobjectivesbasbwellbasbtaxbobjectives.bForbinstance,bifbabw
ealthybclientbwantsbtobminimizebherbestatebtaxesbwhilebpassingbthebgreatestbvaluebpossiblebtobherbdes
cendants,byoubwouldbnotbsuggestbthatbshebleavebthebmajoritybofbherbestatebtobcharitybandbonlybabfewb
hundredbthousandbdollarsbtobherbdescendants.bAlthoughbthisbwouldbreducebherbestatebtaxbliabilitybtob
zero,bitbwouldbbebinconsistentbwithbherbobjectivebofballowingbherbdescendantsbtobreceivebasbmuchbaf
ter-taxbwealthbasbpossible.
PagebRef.:b C:1-2;bExamplebC:1-
2bObjective:b 1
LO2:b b StepsbinbthebTaxbResearchbProcess
1) Identifybwhichbofbthebfollowingbstatementsbisbtrue.
A) Taxbplanningbisbanbintegralbpartbofbbothbclosed-factbsituationsbandbopen-factbsituations.
B) Thebfirstbstepbinbconductingbtaxbresearchbisbtobclearlybunderstandbthebissuesbinvolved.
C) ThebStatementsbonbStandardsbforbTaxbServicesbrecommendbthatbonlybwrittenbtaxbadvicebbebp
rovidedbtobthebclientbinballbsituations.
D) Allbofbthebabovebarebfalse.b
Answer:b C
Explanation:b ThebStatementsbonbStandardsbforbTaxbServicesbrecommendbthatbonlybwrittenbtaxbadvi
cebbebprovidedbtobthebclientbinballbsituations.
PagebRef.:b C:1-3bthroughbC:1-
5bObjective:b 2
2) Describebthebformatbofbabclientbmemo.
Answer:b Abclientbmemobshouldbincludebabstatementbofbthebfacts,bablistbofbissues,babdiscussionbofbre
levantbauthority,banalysis,bandbrecommendationsbofbappropriatebactionsbtobthebclientbbasedbonbtheb
researchbresults.
PagebRef.:b SeebAdditionalbCommentbpagebC:1-
4bObjective:b 2
2
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
3) Outlinebandbdiscussbthebtaxbresearchbprocess.b
Answer:
1) Thebfactsbmustbbebdetermined.bHowever,bsomebfactsbmaybnotbhaveboccurredbinbanbopen-
factbsituation.bWherebfactsbhavebnotbyetboccurred,bitbisbusefulbtobreviewbtaxbresearchbmaterialbtobd
eterminebwhichbfactsbwouldbproducebthebmostbfavorableboutcome.
2) Thebissuesbmustbbebdetermined.bThebissuesbmaybnotbalwaysbbebclearbandbmaybbebdifferentbthanbt
hebclientbbelieves.bThus,bonlybabthoroughbunderstandingbofbthebfactsbpermitsbanbadequatebformulati
onbofbthebissues.
3) Determinebwhichbauthoritiesbarebapplicable.
4) Evaluatebthebauthorities.bChoosebthebonesbtobfollowbwhenbtherebarebconflictingbauthorities.
5) Communicatebthebresultbtobthebclient.bThebcommunicationbwithbthebclientbshouldbnotbresultbinba
bmisunderstanding.bWhilebdiscussionsbwithbthebclientbmaybbebsuitable,bitbisbrecommendedbbybthebA
ICPA'sbStatementsbonbStandardsbforbTaxbServicesbthatbthebcommunicationbbebwrittenbwherebissues
barebimportant,bunusualborbcomplicated.bManybfirms brequirebthatbconclusionsbbebcommunicatedbinb
writing.
PagebRef.:b C:1-
4bObjective:b 2
LO3:b b ImportancebofbthebFactsbtobthebTaxbConsequences
1) Thebtaxbconsultantbcanbgivebanbopinionbonbabtaxbfactbpatternbwithoutballbthebfacts.b
Answer:b FALSE
Explanation:b Taxbpractitionerbshouldbnotbprovidebanbopinionbwithoutballbrelevantbfacts.bPage
bRef.:b C:1-6
Objective:b b 3
2) Taxbcompliancebisbthebbiggestbcomponentbofbabtaxbpractice.b
Answer:b FALSE
Explanation:b Taxbconsultingbisbthebbiggestbcomponentbofbtaxbpractice.bPage
bRef.:b C:1-6
Objective:b b 3
LO4:b b ThebSourcesbofbTaxbLaw
1) ThebInternalbRevenuebCodebofb1986bcontainsbthebcurrentbversionbofbthebtaxblaw.b
Answer:b TRUE
Explanation:b Theblastbupdatebwasb1986.b
PagebRef.:b C:1-8
Objective:b b 4
2) RegulationsbissuedbpriorbtobtheblatestbtaxblegislationbdealingbwithbabspecificbCodebsectionbarebs
tillbeffectivebtobthebextentbtheybdobnotbconflictbwithbthebprovisionsbinbthebnewblegislation.bAnswe
r:b TRUE
Explanation:b PerbIRCbthisbremainsbaccurate.bPag
ebRef.:b C:1-9
Objective:b b 4
3
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
, DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
3) FinalbregulationsbhavebalmostbthebsameblegislativebweightbasbthebIRC.b
Answer:b TRUE
Explanation:b ThebCourtsbhavebfollowedbthisbconcept.bPag
ebRef.:b C:1-10
Objective:b b 4
4) AbrevenuebrulingbisbissuedbbybthebInternalbRevenuebServicebonlybinbresponsebtobabverbalbi
nquirybbybabtaxpayer.
Answer:b b FALSE
Explanation:b ThebIRSbmaybvoluntarilybissuebabrevenuebruling.b
PagebRef.:b C:1-12
Objective:b b 4
5) TaxpayersbmustbpaybthebdisputedbtaxbpriorbtobfilingbabcasebwithbthebTaxbCourt.b
Answer:b FALSE
Explanation:b TaxbCourtbisbthebonlybcourtbavailablebinbwhichbtaxpayerbdoesbnotbhavebtobprepaybtheb
tax.
PagebRef.:b C:1-14bandbC:1-
15bObjective:b 4
6) AppealsbfrombthebU.S.bTaxbCourtbarebtobthebCourtbofbAppealsbforbthebFederalbCircuit.b
Answer:b FALSE
Explanation:b AppealsbfrombthebUSbTaxbCourtbarebtobthebCourtbofbAppealsbforbthebrespectivebcircuit
.
PagebRef.:b C:1-14bandbC:1-
15bObjective:b 4
7) AppealsbfrombthebCourtbofbAppealsbgobtobthebSupremebCourtbunderbabwritbofbcertiorari.bThebS
upremebCourtbdecidesbwhetherborbnotbtheybwillbhearbthebcase.
Answer:b b TRUE
Explanation:b USSCbreviewsbrequestsbbeforebacceptance.b
PagebRef.:b C:1-14bandbC:1-15
Objective:b b 4
8) WhenbthebTaxbCourtbfollowsbthebopinionbofbthebcircuitbcourtbofbappealsbtobwhichbthebcasebisba
ppealable,bthebcourtbisbfollowingbthe
A) Golsenbrule.
B) Acquiescencebrule.
C) Forumbshoppingbrule.
D) Conformitybrule.
Answer:b b A
Explanation:b Sinceb1970bthebTaxbCourtbhasbfollowedbthebGolsenbconcept.bP
agebRef.:b C:1-21
Objective:b b 4
4
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
b b b b b b b b b b b
dition Rupert b
Pearson'sbFederalbTaxationb2021:bComp.,b34eb(Rupert/Anderson)b
ChapterbC1: TaxbResearch
LO1:b b OverviewbofbTaxbResearch
1) Taxbplanningbisbnotbanbintegralbpartbofbopen-
factbsituations.bAnswer:b FALSE
Explanation:b Itbisbintegral.b
PagebRef.:b C:1-
2bObjective:b 1
2) Whenbabtaxpayerbcontactsbabtaxbadvisorbrequestingbadvicebasbtobthebmostbadvantageousbwaybtobd
isposebofbabstock,bthebtaxbadvisorbisbfacedbwith
A) abrestricted-factbsituation.
B) abclosed-factbsituation.
C) anbopen-factbsituation.
D) abrecognized-
factbsituation.bAnswer:b C
Explanation:b Advicebbeforebtransactionbisbopenbfactbsituation.b
PagebRef.:b C:1-2
Objective:b b 1
3) Investigationbofbabtaxbproblembthatbinvolvesbabclosed-factbsituationbmeansbthat
A) thebclient'sbtransactionsbhavebalreadyboccurredbandbthebtaxbquestionsbmustbnowbbebresolved.
B) thebclient'sbtaxbreturnbhasbyetbtobbebfiled.
C) futurebeventsbmaybbebplannedbandbcontrolled.
D) researchbisbprimarilybconcernedbwithbapplyingbtheblawbtobthebfactsbasbtheybexist.b
Answer:b A
Explanation:b Afterbthebfactbrequestbisbabclosedbfactbsituation.bPa
gebRef.:b C:1-2
Objective:b b 1
4) Explainbthebdifferencebbetweenbabclosed-factbandbopen-factbsituation.
Answer:b Inbabclosed-
factbsituation,bthebtransactionbhasboccurredbandbthebfactsbarebnotbsubjectbtobchange.bInbanbopen-
factbsituation,bthebtransactionbisbinbthebformativeborbprojectedbstage,bandbthebtaxpayerbisbablebtobstruc
turebthebfactsbsobthatbthebtaxbconsequencesbofbthebtransactionbcanbbebmorebfavorable.
PagebRef.:b C:1-
2bObjective:b 1
1
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
5) Inballbsituations,btaxbconsiderationsbarebofbprimarybimportance.bDobyoubagreeborbdisagree?b
Supportbyourbanswer.
Answer:b Itbisbimportantbtobconsiderbnontaxbobjectivesbasbwellbasbtaxbobjectives.bForbinstance,bifbabw
ealthybclientbwantsbtobminimizebherbestatebtaxesbwhilebpassingbthebgreatestbvaluebpossiblebtobherbdes
cendants,byoubwouldbnotbsuggestbthatbshebleavebthebmajoritybofbherbestatebtobcharitybandbonlybabfewb
hundredbthousandbdollarsbtobherbdescendants.bAlthoughbthisbwouldbreducebherbestatebtaxbliabilitybtob
zero,bitbwouldbbebinconsistentbwithbherbobjectivebofballowingbherbdescendantsbtobreceivebasbmuchbaf
ter-taxbwealthbasbpossible.
PagebRef.:b C:1-2;bExamplebC:1-
2bObjective:b 1
LO2:b b StepsbinbthebTaxbResearchbProcess
1) Identifybwhichbofbthebfollowingbstatementsbisbtrue.
A) Taxbplanningbisbanbintegralbpartbofbbothbclosed-factbsituationsbandbopen-factbsituations.
B) Thebfirstbstepbinbconductingbtaxbresearchbisbtobclearlybunderstandbthebissuesbinvolved.
C) ThebStatementsbonbStandardsbforbTaxbServicesbrecommendbthatbonlybwrittenbtaxbadvicebbebp
rovidedbtobthebclientbinballbsituations.
D) Allbofbthebabovebarebfalse.b
Answer:b C
Explanation:b ThebStatementsbonbStandardsbforbTaxbServicesbrecommendbthatbonlybwrittenbtaxbadvi
cebbebprovidedbtobthebclientbinballbsituations.
PagebRef.:b C:1-3bthroughbC:1-
5bObjective:b 2
2) Describebthebformatbofbabclientbmemo.
Answer:b Abclientbmemobshouldbincludebabstatementbofbthebfacts,bablistbofbissues,babdiscussionbofbre
levantbauthority,banalysis,bandbrecommendationsbofbappropriatebactionsbtobthebclientbbasedbonbtheb
researchbresults.
PagebRef.:b SeebAdditionalbCommentbpagebC:1-
4bObjective:b 2
2
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
3) Outlinebandbdiscussbthebtaxbresearchbprocess.b
Answer:
1) Thebfactsbmustbbebdetermined.bHowever,bsomebfactsbmaybnotbhaveboccurredbinbanbopen-
factbsituation.bWherebfactsbhavebnotbyetboccurred,bitbisbusefulbtobreviewbtaxbresearchbmaterialbtobd
eterminebwhichbfactsbwouldbproducebthebmostbfavorableboutcome.
2) Thebissuesbmustbbebdetermined.bThebissuesbmaybnotbalwaysbbebclearbandbmaybbebdifferentbthanbt
hebclientbbelieves.bThus,bonlybabthoroughbunderstandingbofbthebfactsbpermitsbanbadequatebformulati
onbofbthebissues.
3) Determinebwhichbauthoritiesbarebapplicable.
4) Evaluatebthebauthorities.bChoosebthebonesbtobfollowbwhenbtherebarebconflictingbauthorities.
5) Communicatebthebresultbtobthebclient.bThebcommunicationbwithbthebclientbshouldbnotbresultbinba
bmisunderstanding.bWhilebdiscussionsbwithbthebclientbmaybbebsuitable,bitbisbrecommendedbbybthebA
ICPA'sbStatementsbonbStandardsbforbTaxbServicesbthatbthebcommunicationbbebwrittenbwherebissues
barebimportant,bunusualborbcomplicated.bManybfirms brequirebthatbconclusionsbbebcommunicatedbinb
writing.
PagebRef.:b C:1-
4bObjective:b 2
LO3:b b ImportancebofbthebFactsbtobthebTaxbConsequences
1) Thebtaxbconsultantbcanbgivebanbopinionbonbabtaxbfactbpatternbwithoutballbthebfacts.b
Answer:b FALSE
Explanation:b Taxbpractitionerbshouldbnotbprovidebanbopinionbwithoutballbrelevantbfacts.bPage
bRef.:b C:1-6
Objective:b b 3
2) Taxbcompliancebisbthebbiggestbcomponentbofbabtaxbpractice.b
Answer:b FALSE
Explanation:b Taxbconsultingbisbthebbiggestbcomponentbofbtaxbpractice.bPage
bRef.:b C:1-6
Objective:b b 3
LO4:b b ThebSourcesbofbTaxbLaw
1) ThebInternalbRevenuebCodebofb1986bcontainsbthebcurrentbversionbofbthebtaxblaw.b
Answer:b TRUE
Explanation:b Theblastbupdatebwasb1986.b
PagebRef.:b C:1-8
Objective:b b 4
2) RegulationsbissuedbpriorbtobtheblatestbtaxblegislationbdealingbwithbabspecificbCodebsectionbarebs
tillbeffectivebtobthebextentbtheybdobnotbconflictbwithbthebprovisionsbinbthebnewblegislation.bAnswe
r:b TRUE
Explanation:b PerbIRCbthisbremainsbaccurate.bPag
ebRef.:b C:1-9
Objective:b b 4
3
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
, DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Comprehensive 34th E
b b b b b b b b b b b
dition Rupert b
3) FinalbregulationsbhavebalmostbthebsameblegislativebweightbasbthebIRC.b
Answer:b TRUE
Explanation:b ThebCourtsbhavebfollowedbthisbconcept.bPag
ebRef.:b C:1-10
Objective:b b 4
4) AbrevenuebrulingbisbissuedbbybthebInternalbRevenuebServicebonlybinbresponsebtobabverbalbi
nquirybbybabtaxpayer.
Answer:b b FALSE
Explanation:b ThebIRSbmaybvoluntarilybissuebabrevenuebruling.b
PagebRef.:b C:1-12
Objective:b b 4
5) TaxpayersbmustbpaybthebdisputedbtaxbpriorbtobfilingbabcasebwithbthebTaxbCourt.b
Answer:b FALSE
Explanation:b TaxbCourtbisbthebonlybcourtbavailablebinbwhichbtaxpayerbdoesbnotbhavebtobprepaybtheb
tax.
PagebRef.:b C:1-14bandbC:1-
15bObjective:b 4
6) AppealsbfrombthebU.S.bTaxbCourtbarebtobthebCourtbofbAppealsbforbthebFederalbCircuit.b
Answer:b FALSE
Explanation:b AppealsbfrombthebUSbTaxbCourtbarebtobthebCourtbofbAppealsbforbthebrespectivebcircuit
.
PagebRef.:b C:1-14bandbC:1-
15bObjective:b 4
7) AppealsbfrombthebCourtbofbAppealsbgobtobthebSupremebCourtbunderbabwritbofbcertiorari.bThebS
upremebCourtbdecidesbwhetherborbnotbtheybwillbhearbthebcase.
Answer:b b TRUE
Explanation:b USSCbreviewsbrequestsbbeforebacceptance.b
PagebRef.:b C:1-14bandbC:1-15
Objective:b b 4
8) WhenbthebTaxbCourtbfollowsbthebopinionbofbthebcircuitbcourtbofbappealsbtobwhichbthebcasebisba
ppealable,bthebcourtbisbfollowingbthe
A) Golsenbrule.
B) Acquiescencebrule.
C) Forumbshoppingbrule.
D) Conformitybrule.
Answer:b b A
Explanation:b Sinceb1970bthebTaxbCourtbhasbfollowedbthebGolsenbconcept.bP
agebRef.:b C:1-21
Objective:b b 4
4
Copyrightb©b2021bPearsonbEducation,bInc.
mynursytest.store
