1h
Copyrighth©h2023hPearsonhEducation,hInc.h
Pearson'shFederalhTaxationh2023:hCorporations,h36eh(Andersonhethal.)h
ChapterhC1:hhTaxhResearchhh
h
LO1:hhOverviewhofhTaxhResearchh
h
1)hTaxhplanninghishnothanhintegralhparthofhopen-facthsituations.h
Answer:hhFALSEh
Explanation:hhIthishintegral.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
2)hWhenhahtaxpayerhcontactshahtaxhadvisorhrequestinghadvicehashtohthehmosthadvantageoush
wayhtohdisposeh
ofhahstock,hthehtaxhadvisorhishfacedhwithh
A)hahrestricted-facthsituation.h
B)hahclosed-facthsituation.h
C)hanhopen-facthsituation.h
D)hahrecognized-facthsituation.h
Answer:hhCh
Explanation:hhAdvicehbeforehtransactionhishopenhfacthsituation.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
3)hInvestigationhofhahtaxhproblemhthathinvolveshahclosed-facthsituationhmeanshthath
A)hthehclient'shtransactionshhavehalreadyhoccurredhandhthehtaxhquestionshmusthnowhbehresol
ved.h
B)hthehclient'shtaxhreturnhhashyethtohbehfiled.h
C)hfutureheventshmayhbehplannedhandhcontrolled.h
D)hresearchhishprimarilyhconcernedhwithhapplyinghthehlawhtohthehfactshashtheyhexist.h
Answer:hhAh
Explanation:hhAfterhthehfacthrequesthishahclosedhfacthsituation.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
4)hExplainhthehdifferencehbetweenhahclosed-facthandhopen-facthsituation.h
Answer:hhInhahclosed-
facthsituation,hthehtransactionhhashoccurredhandhthehfactsharehnothsubjecthtohchange.h
Inhanhopen-
facthsituation,hthehtransactionhishinhthehformativehorhprojectedhstage,handhthehtaxpayerhishabl
ehtoh
structurehthehfactshsohthaththehtaxhconsequenceshofhthehtransactionhcanhbehmorehfavorable.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
h
h
,ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
2h
Copyrighth©h2023hPearsonhEducation,hInc.h
5)hInhallhsituations,htaxhconsiderationsharehofhprimaryhimportance.hDohyouhagreehorhdisagree
?hSupporthyourh
answer.h
Answer:hhIthishimportanthtohconsiderhnontaxhobjectiveshashwellhashtaxhobjectives.hForhinstanc
e,hifhahwealthyh
clienthwantshtohminimizehherhestatehtaxeshwhilehpassinghthehgreatesthvaluehpossiblehtohherhd
escendants,h
youhwouldhnothsuggesththathshehleavehthehmajorityhofhherhestatehtohcharityhandhonlyhahfewhhu
ndredh
thousandhdollarshtohherhdescendants.hAlthoughhthishwouldhreducehherhestatehtaxhliabilityhtoh
zero,hithwouldh
behinconsistenthwithhherhobjectivehofhallowinghherhdescendantshtohreceivehashmuchhafter-
taxhwealthhash
possible.h
PagehRef.:hhC:1-3h
Objective:hh1h
h
LO2:hhStepshinhthehTaxhResearchhProcessh
h
1)hIdentifyhwhichhofhthehfollowinghstatementshishtrue.h
A)hTaxhplanninghishanhintegralhparthofhbothhclosed-facthsituationshandhopen-facthsituations.h
B)hThehfirsthstephinhconductinghtaxhresearchhishtohclearlyhunderstandhthehissueshinvolved.h
C)hThehStatementshonhStandardshforhTaxhServiceshrecommendhthathonlyhwrittenhtaxhadvicehb
ehprovidedhtoh
thehclienthinhallhsituations.h
D)hAllhofhthehaboveharehfalse.h
Answer:hhCh
Explanation:hhThehStatementshonhStandardshforhTaxhServiceshrecommendhthathonlyhwrittenht
axhadvicehbeh
providedhtohthehclienthinhallhsituations.h
PagehRef.:hhC:1-3hthroughhC:1-5h
Objective:hh2h
h
2)hDescribehthehformathofhahclienthmemo.h
Answer:hhAhclienthmemohshouldhincludehahstatementhofhthehfacts,hahlisthofhissues,hahdiscussion
hofhrelevanth
authority,hanalysis,handhrecommendationshofhappropriatehactionshtohthehclienthbasedhonhtheh
researchh
results.h
PagehRef.:hhSeehAdditionalhCommenthpagehC:1-4h
,Objective:hh2h
h
3)hOutlinehandhdiscusshthehtaxhresearchhprocess.h
Answer:h
1)hThehfactshmusthbehdetermined.hHowever,hsomehfactshmayhnothhavehoccurredhinhanhopen-
facthsituation.h
Wherehfactshhavehnothyethoccurred,hithishusefulhtohreviewhtaxhresearchhmaterialhtohdetermine
hwhichhfactsh
wouldhproducehthehmosthfavorablehoutcome.h
2)hThehissueshmusthbehdetermined.hThehissueshmayhnothalwayshbehclearhandhmayhbehdifferen
ththanhtheh
clienthbelieves.hThus,honlyhahthoroughhunderstandinghofhthehfactshpermitshanhadequatehform
ulationhofhtheh
issues.h
3)hDeterminehwhichhauthoritiesharehapplicable.h
4)hEvaluatehthehauthorities.hChoosehthehoneshtohfollowhwhenhthereharehconflictinghauthoritie
s.h
5)hCommunicatehthehresulthtohthehclient.hThehcommunicationhwithhthehclienthshouldhnothresu
lthinhah
misunderstanding.hWhilehdiscussionshwithhthehclienthmayhbehsuitable,hithishrecommendedhby
hthehAICPA'sh
StatementshonhStandardshforhTaxhServiceshthaththehcommunicationhbehwrittenhwherehissuesh
arehimportant,h
unusualhorhcomplicated.hManyhfirmshrequirehthathconclusionshbehcommunicatedhinhwriting.h
PagehRef.:hhC:1-5h
Objective:hh2h
ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
3h
Copyrighth©h2023hPearsonhEducation,hInc.h
h
4)hClienthapproacheshyouhregardinghthehtaxhimplicationshofhanhacquisitionhofhahcompetitor'sh
business.h
Describehthehsixhbasichstepshofhtaxhresearchhprocesshtohassisththehclient.h
Answer:hhInhbothhopen-handhclosed-
facthsituations,hthehtaxhresearchhprocesshinvolveshsixhbasichsteps:h
1.hDeterminehthehfacts.h
2.hIdentifyhthehissuesh(questions).h
3.hLocatehthehapplicablehauthorities.h
4.hEvaluatehthehauthoritieshandhchoosehthosehtohfollowhwherehthehauthoritieshconflict.h
5.hAnalyzehthehfactshinhtermshofhthehapplicablehauthorities.h
6.hCommunicatehconclusionshandhrecommendationshtohthehclient.h
PagehRef.:hhC:1-3h
, Objective:hh2h
h
5)hWhenhshouldhoralhclienthcommunicationshbehfollowedhuphinhwriting?h
Answer:hhWrittenhcommunicationsharehrecommendedhinhimportant,hunusual,hsubstantialh
dollarhvalue,horhcomplicatedhtransactions.h
PagehRef.:hhC:1-5h
Objective:hh2h
h
LO3:hhImportancehofhthehFactshtohthehTaxhConsequencesh
h
1)hThehtaxhconsultanthcanhgivehanhopinionhonhahtaxhfacthpatternhwithouthallhthehfacts.h
Answer:hhFALSEh
Explanation:hhTaxhpractitionerhshouldhnothprovidehanhopinionhwithouthallhrelevanthfacts.h
PagehRef.:hhC:1-6h
Objective:hh3h
h
2)hTaxhcompliancehishthehbiggesthcomponenthofhahtaxhpractice.h
Answer:hhFALSEh
Explanation:hhTaxhconsultinghishthehbiggesthcomponenthofhtaxhpractice.h
PagehRef.:hhC:1-6h
Objective:hh3h
h
LO4:hhThehSourceshofhTaxhLawh
h
1)hThehInternalhRevenuehCodehofh1986hcontainshthehcurrenthversionhofhthehtaxhlaw.h
Answer:hhTRUEh
Explanation:hhThehlasthupdatehwash1986.h
PagehRef.:hhC:1-8h
Objective:hh4h
h
2)hRegulationshissuedhpriorhtohthehlatesthtaxhlegislationhdealinghwithhahspecifichCodehsectionh
arehstillh
effectivehtohthehextenththeyhdohnothconflicthwithhthehprovisionshinhthehnewhlegislation.h
Answer:hhTRUEh
Explanation:hhPerhIRChthishremainshaccurate.h
PagehRef.:hhC:1-9h
Objective:hh4h
h
ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
4h
Copyrighth©h2023hPearsonhEducation,hInc.h
3)hFinalhregulationshhavehalmosththehsamehlegislativehweighthashthehIRC.h
Answer:hhTRUEh
Explanation:hhThehCourtshhavehfollowedhthishconcept.h
PagehRef.:hhC:1-10h
Objective:hh4h
Copyrighth©h2023hPearsonhEducation,hInc.h
Pearson'shFederalhTaxationh2023:hCorporations,h36eh(Andersonhethal.)h
ChapterhC1:hhTaxhResearchhh
h
LO1:hhOverviewhofhTaxhResearchh
h
1)hTaxhplanninghishnothanhintegralhparthofhopen-facthsituations.h
Answer:hhFALSEh
Explanation:hhIthishintegral.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
2)hWhenhahtaxpayerhcontactshahtaxhadvisorhrequestinghadvicehashtohthehmosthadvantageoush
wayhtohdisposeh
ofhahstock,hthehtaxhadvisorhishfacedhwithh
A)hahrestricted-facthsituation.h
B)hahclosed-facthsituation.h
C)hanhopen-facthsituation.h
D)hahrecognized-facthsituation.h
Answer:hhCh
Explanation:hhAdvicehbeforehtransactionhishopenhfacthsituation.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
3)hInvestigationhofhahtaxhproblemhthathinvolveshahclosed-facthsituationhmeanshthath
A)hthehclient'shtransactionshhavehalreadyhoccurredhandhthehtaxhquestionshmusthnowhbehresol
ved.h
B)hthehclient'shtaxhreturnhhashyethtohbehfiled.h
C)hfutureheventshmayhbehplannedhandhcontrolled.h
D)hresearchhishprimarilyhconcernedhwithhapplyinghthehlawhtohthehfactshashtheyhexist.h
Answer:hhAh
Explanation:hhAfterhthehfacthrequesthishahclosedhfacthsituation.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
4)hExplainhthehdifferencehbetweenhahclosed-facthandhopen-facthsituation.h
Answer:hhInhahclosed-
facthsituation,hthehtransactionhhashoccurredhandhthehfactsharehnothsubjecthtohchange.h
Inhanhopen-
facthsituation,hthehtransactionhishinhthehformativehorhprojectedhstage,handhthehtaxpayerhishabl
ehtoh
structurehthehfactshsohthaththehtaxhconsequenceshofhthehtransactionhcanhbehmorehfavorable.h
PagehRef.:hhC:1-2h
Objective:hh1h
h
h
h
,ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
2h
Copyrighth©h2023hPearsonhEducation,hInc.h
5)hInhallhsituations,htaxhconsiderationsharehofhprimaryhimportance.hDohyouhagreehorhdisagree
?hSupporthyourh
answer.h
Answer:hhIthishimportanthtohconsiderhnontaxhobjectiveshashwellhashtaxhobjectives.hForhinstanc
e,hifhahwealthyh
clienthwantshtohminimizehherhestatehtaxeshwhilehpassinghthehgreatesthvaluehpossiblehtohherhd
escendants,h
youhwouldhnothsuggesththathshehleavehthehmajorityhofhherhestatehtohcharityhandhonlyhahfewhhu
ndredh
thousandhdollarshtohherhdescendants.hAlthoughhthishwouldhreducehherhestatehtaxhliabilityhtoh
zero,hithwouldh
behinconsistenthwithhherhobjectivehofhallowinghherhdescendantshtohreceivehashmuchhafter-
taxhwealthhash
possible.h
PagehRef.:hhC:1-3h
Objective:hh1h
h
LO2:hhStepshinhthehTaxhResearchhProcessh
h
1)hIdentifyhwhichhofhthehfollowinghstatementshishtrue.h
A)hTaxhplanninghishanhintegralhparthofhbothhclosed-facthsituationshandhopen-facthsituations.h
B)hThehfirsthstephinhconductinghtaxhresearchhishtohclearlyhunderstandhthehissueshinvolved.h
C)hThehStatementshonhStandardshforhTaxhServiceshrecommendhthathonlyhwrittenhtaxhadvicehb
ehprovidedhtoh
thehclienthinhallhsituations.h
D)hAllhofhthehaboveharehfalse.h
Answer:hhCh
Explanation:hhThehStatementshonhStandardshforhTaxhServiceshrecommendhthathonlyhwrittenht
axhadvicehbeh
providedhtohthehclienthinhallhsituations.h
PagehRef.:hhC:1-3hthroughhC:1-5h
Objective:hh2h
h
2)hDescribehthehformathofhahclienthmemo.h
Answer:hhAhclienthmemohshouldhincludehahstatementhofhthehfacts,hahlisthofhissues,hahdiscussion
hofhrelevanth
authority,hanalysis,handhrecommendationshofhappropriatehactionshtohthehclienthbasedhonhtheh
researchh
results.h
PagehRef.:hhSeehAdditionalhCommenthpagehC:1-4h
,Objective:hh2h
h
3)hOutlinehandhdiscusshthehtaxhresearchhprocess.h
Answer:h
1)hThehfactshmusthbehdetermined.hHowever,hsomehfactshmayhnothhavehoccurredhinhanhopen-
facthsituation.h
Wherehfactshhavehnothyethoccurred,hithishusefulhtohreviewhtaxhresearchhmaterialhtohdetermine
hwhichhfactsh
wouldhproducehthehmosthfavorablehoutcome.h
2)hThehissueshmusthbehdetermined.hThehissueshmayhnothalwayshbehclearhandhmayhbehdifferen
ththanhtheh
clienthbelieves.hThus,honlyhahthoroughhunderstandinghofhthehfactshpermitshanhadequatehform
ulationhofhtheh
issues.h
3)hDeterminehwhichhauthoritiesharehapplicable.h
4)hEvaluatehthehauthorities.hChoosehthehoneshtohfollowhwhenhthereharehconflictinghauthoritie
s.h
5)hCommunicatehthehresulthtohthehclient.hThehcommunicationhwithhthehclienthshouldhnothresu
lthinhah
misunderstanding.hWhilehdiscussionshwithhthehclienthmayhbehsuitable,hithishrecommendedhby
hthehAICPA'sh
StatementshonhStandardshforhTaxhServiceshthaththehcommunicationhbehwrittenhwherehissuesh
arehimportant,h
unusualhorhcomplicated.hManyhfirmshrequirehthathconclusionshbehcommunicatedhinhwriting.h
PagehRef.:hhC:1-5h
Objective:hh2h
ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
3h
Copyrighth©h2023hPearsonhEducation,hInc.h
h
4)hClienthapproacheshyouhregardinghthehtaxhimplicationshofhanhacquisitionhofhahcompetitor'sh
business.h
Describehthehsixhbasichstepshofhtaxhresearchhprocesshtohassisththehclient.h
Answer:hhInhbothhopen-handhclosed-
facthsituations,hthehtaxhresearchhprocesshinvolveshsixhbasichsteps:h
1.hDeterminehthehfacts.h
2.hIdentifyhthehissuesh(questions).h
3.hLocatehthehapplicablehauthorities.h
4.hEvaluatehthehauthoritieshandhchoosehthosehtohfollowhwherehthehauthoritieshconflict.h
5.hAnalyzehthehfactshinhtermshofhthehapplicablehauthorities.h
6.hCommunicatehconclusionshandhrecommendationshtohthehclient.h
PagehRef.:hhC:1-3h
, Objective:hh2h
h
5)hWhenhshouldhoralhclienthcommunicationshbehfollowedhuphinhwriting?h
Answer:hhWrittenhcommunicationsharehrecommendedhinhimportant,hunusual,hsubstantialh
dollarhvalue,horhcomplicatedhtransactions.h
PagehRef.:hhC:1-5h
Objective:hh2h
h
LO3:hhImportancehofhthehFactshtohthehTaxhConsequencesh
h
1)hThehtaxhconsultanthcanhgivehanhopinionhonhahtaxhfacthpatternhwithouthallhthehfacts.h
Answer:hhFALSEh
Explanation:hhTaxhpractitionerhshouldhnothprovidehanhopinionhwithouthallhrelevanthfacts.h
PagehRef.:hhC:1-6h
Objective:hh3h
h
2)hTaxhcompliancehishthehbiggesthcomponenthofhahtaxhpractice.h
Answer:hhFALSEh
Explanation:hhTaxhconsultinghishthehbiggesthcomponenthofhtaxhpractice.h
PagehRef.:hhC:1-6h
Objective:hh3h
h
LO4:hhThehSourceshofhTaxhLawh
h
1)hThehInternalhRevenuehCodehofh1986hcontainshthehcurrenthversionhofhthehtaxhlaw.h
Answer:hhTRUEh
Explanation:hhThehlasthupdatehwash1986.h
PagehRef.:hhC:1-8h
Objective:hh4h
h
2)hRegulationshissuedhpriorhtohthehlatesthtaxhlegislationhdealinghwithhahspecifichCodehsectionh
arehstillh
effectivehtohthehextenththeyhdohnothconflicthwithhthehprovisionshinhthehnewhlegislation.h
Answer:hhTRUEh
Explanation:hhPerhIRChthishremainshaccurate.h
PagehRef.:hhC:1-9h
Objective:hh4h
h
ACCESShTesthBankhforhPearson'shFederalhTaxationh2023hComprehensiveh36th
hhhhhhhhhhhhhhhhhhhhhhhhhhhhEditionhRupert
nursytestbank.store
4h
Copyrighth©h2023hPearsonhEducation,hInc.h
3)hFinalhregulationshhavehalmosththehsamehlegislativehweighthashthehIRC.h
Answer:hhTRUEh
Explanation:hhThehCourtshhavehfollowedhthishconcept.h
PagehRef.:hhC:1-10h
Objective:hh4h
