ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
Pearson'sgFederalgTaxationg2023:gCorporations,g36eg(Andersongetgal.
)gChaptergC1: TaxgResearch
LO1:g g OverviewgofgTaxgResearch
1) Taxgplanninggisgnotgangintegralgpartgofgopen-
factgsituations.gAnswer:g FALSE
Explanation:g Itgisgintegra
l.gPagegRef.:g C:1-
2g Objective:g 1
2) Whengagtaxpayergcontactsgagtaxgadvisorgrequestinggadvicegasgtogthegmostgadvantageousgwaygtogdis
posegofgagstock,gthegtaxgadvisorgisgfacedgwith
A) agrestricted-factgsituation.
B) agclosed-factgsituation.
C) angopen-factgsituation.
D) agrecognized-
factgsituation.gAnswer:g C
Explanation:g Advicegbeforegtransactiongisgopengfactgsituatio
n.gPagegRef.:g C:1-2
Objective:g g 1
3) Investigationgofgagtaxgproblemgthatginvolvesgagclosed-factgsituationgmeansgthat
A) thegclient'sgtransactionsghavegalreadygoccurredgandgthegtaxgquestionsgmustgnowgbegresolved.
B) thegclient'sgtaxgreturnghasgyetgtogbegfiled.
C) futuregeventsgmaygbegplannedgandgcontrolled.
D) researchgisgprimarilygconcernedgwithgapplyinggtheglawgtogthegfactsgasgtheyge
xist.gAnswer:g A
Explanation:g Aftergthegfactgrequestgisgagclosedgfactgsituation
.gPagegRef.:g C:1-2
Objective:g g 1
4) Explaingthegdifferencegbetweengagclosed-factgandgopen-factgsituation.
Answer:g Ingagclosed-
factgsituation,gthegtransactionghasgoccurredgandgthegfactsgaregnotgsubjectgtogchange.gIngangopen-
factgsituation,gthegtransactiongisgingthegformativegorgprojectedgstage,gandgthegtaxpayergisgablegtogstruct
uregthegfactsgsogthatgthegtaxgconsequencesgofgthegtransactiongcangbegmoregfavorable.
PagegRef.:g C:1-
2gObjective:g 1
1
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
,ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
5) Ingallgsituations,gtaxgconsiderationsgaregofgprimarygimportance.gDogyougagreegorgdisagree?gSupportg
yourganswer.
Answer:g Itgisgimportantgtogconsidergnontaxgobjectivesgasgwellgasgtaxgobjectives.gForginstance,gifgagwe
althygclientgwantsgtogminimizeghergestategtaxesgwhilegpassinggtheggreatestgvaluegpossiblegtoghergdesc
endants,gyougwouldgnotgsuggestgthatgshegleavegthegmajoritygofghergestategtogcharitygandgonlygagfewg
hundredgthousandgdollarsgtoghergdescendants.gAlthoughgthisgwouldgreduceghergestategtaxgliabilitygtog
zero,gitgwouldgbeginconsistentgwithghergobjectivegofgallowingghergdescendantsgtogreceivegasgmuchgaft
er-taxgwealthgasgpossible.
PagegRef.:g C:1-
3gObjective:g 1
LO2:g g StepsgingthegTaxgResearchgProcess
1) Identifygwhichgofgthegfollowinggstatementsgisgtrue.
A) Taxgplanninggisgangintegralgpartgofgbothgclosed-factgsituationsgandgopen-factgsituations.
B) Thegfirstgstepgingconductinggtaxgresearchgisgtogclearlygunderstandgthegissuesginvolved.
C) ThegStatementsgongStandardsgforgTaxgServicesgrecommendgthatgonlygwrittengtaxgadvicegbegprovid
edgtogthegclientgingallgsituations.
D) Allgofgthegabovegaregfals
e.gAnswer:g C
Explanation:g ThegStatementsgongStandardsgforgTaxgServicesgrecommendgthatgonlygwrittengtaxgadviceg
begprovidedgtogthegclientgingallgsituations.
PagegRef.:g C:1-3gthroughgC:1-
5gObjective:g 2
2) Describegthegformatgofgagclientgmemo.
Answer:g Agclientgmemogshouldgincludegagstatementgofgthegfacts,gaglistgofgissues,gagdiscussiongofgrele
vantgauthority,ganalysis,gandgrecommendationsgofgappropriategactionsgtogthegclientgbasedgongthegrese
archgresults.
PagegRef.:g SeegAdditionalgCommentgpagegC:1
-4gObjective:g 2
3) Outlinegandgdiscussgthegtaxgresearchgproces
s.gAnswer:
1) Thegfactsgmustgbegdetermined.gHowever,gsomegfactsgmaygnotghavegoccurredgingangopen-
factgsituation.gWheregfactsghavegnotgyetgoccurred,gitgisgusefulgtogreviewgtaxgresearchgmaterialgtogdeter
minegwhichgfactsgwouldgproducegthegmostgfavorablegoutcome.
2) Thegissuesgmustgbegdetermined.gThegissuesgmaygnotgalwaysgbegcleargandgmaygbegdifferentgthang
thegclientgbelieves.gThus,gonlygagthoroughgunderstandinggofgthegfactsgpermitsgangadequategformulati
ongofgthegissues.
3) Determinegwhichgauthoritiesgaregapplicable.
4) Evaluategthegauthorities.gChoosegthegonesgtogfollowgwhengtheregaregconflictinggauthorities.
5) Communicategthegresultgtogthegclient.gThegcommunicationgwithgthegclientgshouldgnotgresultgingag
misunderstanding.gWhilegdiscussionsgwithgthegclientgmaygbegsuitable,gitgisgrecommendedgbygthegAIC
PA'sgStatementsgongStandardsgforgTaxgServicesgthatgthegcommunicationgbegwrittengwheregissuesgaregi
mportant,gunusualgorgcomplicated.gManygfirmsgrequiregthatgconclusionsgbegcommunicatedgingwriting
.
PagegRef.:g C:1-
2
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
,ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
5gObjective:g 2
3
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
, ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
4) Clientgapproachesgyougregardinggthegtaxgimplicationsgofgangacquisitiongofgagcompetitor'sgbusin
ess.gDescribegthegsixgbasicgstepsgofgtaxgresearchgprocessgtogassistgthegclient.
Answer:g g Ingbothgopen-gandgclosed-factgsituations,gthegtaxgresearchgprocessginvolvesgsixgbasicgsteps:
1. Determinegthegfacts.
2. Identifygthegissuesg(questions).
3. Locategthegapplicablegauthorities.
4. Evaluategthegauthoritiesgandgchoosegthosegtogfollowgwheregthegauthoritiesgconflict.
5. Analyzegthegfactsgingtermsgofgthegapplicablegauthorities.
6. Communicategconclusionsgandgrecommendationsgtogthegclie
nt.gPagegRef.:g C:1-3
Objective:g g 2
5) Whengshouldgoralgclientgcommunicationsgbegfollowedgupgingwriting?
Answer:g Writtengcommunicationsgaregrecommendedgingimportant,gunusual,gsubstantial
gdollargvalue,gorgcomplicatedgtransactions.
PagegRef.:g C:1-
5gObjective:g 2
LO3:g g ImportancegofgthegFactsgtogthegTaxgConsequences
1) Thegtaxgconsultantgcanggivegangopiniongongagtaxgfactgpatterngwithoutgallgthegf
acts.gAnswer:g FALSE
Explanation:g Taxgpractitionergshouldgnotgprovidegangopiniongwithoutgallgrelevantgfacts.
gPagegRef.:g C:1-6
Objective:g g 3
2) Taxgcompliancegisgthegbiggestgcomponentgofgagtaxgpracti
ce.gAnswer:g FALSE
Explanation:g Taxgconsultinggisgthegbiggestgcomponentgofgtaxgpractice
.gPagegRef.:g C:1-6
Objective:g g 3
LO4:g g ThegSourcesgofgTaxgLaw
1) ThegInternalgRevenuegCodegofg1986gcontainsgthegcurrentgversiongofgthegtaxgl
aw.gAnswer:g TRUE
Explanation:g Theglastgupdategwasg198
6.gPagegRef.:g C:1-8
Objective:g g 4
2) RegulationsgissuedgpriorgtogtheglatestgtaxglegislationgdealinggwithgagspecificgCodegsectiongare
gstillgeffectivegtogthegextentgtheygdognotgconflictgwithgthegprovisionsgingthegnewglegislation.
Answer:g g TRUE
Explanation:g PergIRCgthisgremainsgaccurate.gP
agegRef.:g C:1-9
Objective:g g 4
4
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
iongRupert
Pearson'sgFederalgTaxationg2023:gCorporations,g36eg(Andersongetgal.
)gChaptergC1: TaxgResearch
LO1:g g OverviewgofgTaxgResearch
1) Taxgplanninggisgnotgangintegralgpartgofgopen-
factgsituations.gAnswer:g FALSE
Explanation:g Itgisgintegra
l.gPagegRef.:g C:1-
2g Objective:g 1
2) Whengagtaxpayergcontactsgagtaxgadvisorgrequestinggadvicegasgtogthegmostgadvantageousgwaygtogdis
posegofgagstock,gthegtaxgadvisorgisgfacedgwith
A) agrestricted-factgsituation.
B) agclosed-factgsituation.
C) angopen-factgsituation.
D) agrecognized-
factgsituation.gAnswer:g C
Explanation:g Advicegbeforegtransactiongisgopengfactgsituatio
n.gPagegRef.:g C:1-2
Objective:g g 1
3) Investigationgofgagtaxgproblemgthatginvolvesgagclosed-factgsituationgmeansgthat
A) thegclient'sgtransactionsghavegalreadygoccurredgandgthegtaxgquestionsgmustgnowgbegresolved.
B) thegclient'sgtaxgreturnghasgyetgtogbegfiled.
C) futuregeventsgmaygbegplannedgandgcontrolled.
D) researchgisgprimarilygconcernedgwithgapplyinggtheglawgtogthegfactsgasgtheyge
xist.gAnswer:g A
Explanation:g Aftergthegfactgrequestgisgagclosedgfactgsituation
.gPagegRef.:g C:1-2
Objective:g g 1
4) Explaingthegdifferencegbetweengagclosed-factgandgopen-factgsituation.
Answer:g Ingagclosed-
factgsituation,gthegtransactionghasgoccurredgandgthegfactsgaregnotgsubjectgtogchange.gIngangopen-
factgsituation,gthegtransactiongisgingthegformativegorgprojectedgstage,gandgthegtaxpayergisgablegtogstruct
uregthegfactsgsogthatgthegtaxgconsequencesgofgthegtransactiongcangbegmoregfavorable.
PagegRef.:g C:1-
2gObjective:g 1
1
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
,ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
5) Ingallgsituations,gtaxgconsiderationsgaregofgprimarygimportance.gDogyougagreegorgdisagree?gSupportg
yourganswer.
Answer:g Itgisgimportantgtogconsidergnontaxgobjectivesgasgwellgasgtaxgobjectives.gForginstance,gifgagwe
althygclientgwantsgtogminimizeghergestategtaxesgwhilegpassinggtheggreatestgvaluegpossiblegtoghergdesc
endants,gyougwouldgnotgsuggestgthatgshegleavegthegmajoritygofghergestategtogcharitygandgonlygagfewg
hundredgthousandgdollarsgtoghergdescendants.gAlthoughgthisgwouldgreduceghergestategtaxgliabilitygtog
zero,gitgwouldgbeginconsistentgwithghergobjectivegofgallowingghergdescendantsgtogreceivegasgmuchgaft
er-taxgwealthgasgpossible.
PagegRef.:g C:1-
3gObjective:g 1
LO2:g g StepsgingthegTaxgResearchgProcess
1) Identifygwhichgofgthegfollowinggstatementsgisgtrue.
A) Taxgplanninggisgangintegralgpartgofgbothgclosed-factgsituationsgandgopen-factgsituations.
B) Thegfirstgstepgingconductinggtaxgresearchgisgtogclearlygunderstandgthegissuesginvolved.
C) ThegStatementsgongStandardsgforgTaxgServicesgrecommendgthatgonlygwrittengtaxgadvicegbegprovid
edgtogthegclientgingallgsituations.
D) Allgofgthegabovegaregfals
e.gAnswer:g C
Explanation:g ThegStatementsgongStandardsgforgTaxgServicesgrecommendgthatgonlygwrittengtaxgadviceg
begprovidedgtogthegclientgingallgsituations.
PagegRef.:g C:1-3gthroughgC:1-
5gObjective:g 2
2) Describegthegformatgofgagclientgmemo.
Answer:g Agclientgmemogshouldgincludegagstatementgofgthegfacts,gaglistgofgissues,gagdiscussiongofgrele
vantgauthority,ganalysis,gandgrecommendationsgofgappropriategactionsgtogthegclientgbasedgongthegrese
archgresults.
PagegRef.:g SeegAdditionalgCommentgpagegC:1
-4gObjective:g 2
3) Outlinegandgdiscussgthegtaxgresearchgproces
s.gAnswer:
1) Thegfactsgmustgbegdetermined.gHowever,gsomegfactsgmaygnotghavegoccurredgingangopen-
factgsituation.gWheregfactsghavegnotgyetgoccurred,gitgisgusefulgtogreviewgtaxgresearchgmaterialgtogdeter
minegwhichgfactsgwouldgproducegthegmostgfavorablegoutcome.
2) Thegissuesgmustgbegdetermined.gThegissuesgmaygnotgalwaysgbegcleargandgmaygbegdifferentgthang
thegclientgbelieves.gThus,gonlygagthoroughgunderstandinggofgthegfactsgpermitsgangadequategformulati
ongofgthegissues.
3) Determinegwhichgauthoritiesgaregapplicable.
4) Evaluategthegauthorities.gChoosegthegonesgtogfollowgwhengtheregaregconflictinggauthorities.
5) Communicategthegresultgtogthegclient.gThegcommunicationgwithgthegclientgshouldgnotgresultgingag
misunderstanding.gWhilegdiscussionsgwithgthegclientgmaygbegsuitable,gitgisgrecommendedgbygthegAIC
PA'sgStatementsgongStandardsgforgTaxgServicesgthatgthegcommunicationgbegwrittengwheregissuesgaregi
mportant,gunusualgorgcomplicated.gManygfirmsgrequiregthatgconclusionsgbegcommunicatedgingwriting
.
PagegRef.:g C:1-
2
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
,ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
5gObjective:g 2
3
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
, ACCESSgTestgBankgforgPearson'sgFederalgTaxationg2023gComprehensiveg36thgEdit
iongRupert
4) Clientgapproachesgyougregardinggthegtaxgimplicationsgofgangacquisitiongofgagcompetitor'sgbusin
ess.gDescribegthegsixgbasicgstepsgofgtaxgresearchgprocessgtogassistgthegclient.
Answer:g g Ingbothgopen-gandgclosed-factgsituations,gthegtaxgresearchgprocessginvolvesgsixgbasicgsteps:
1. Determinegthegfacts.
2. Identifygthegissuesg(questions).
3. Locategthegapplicablegauthorities.
4. Evaluategthegauthoritiesgandgchoosegthosegtogfollowgwheregthegauthoritiesgconflict.
5. Analyzegthegfactsgingtermsgofgthegapplicablegauthorities.
6. Communicategconclusionsgandgrecommendationsgtogthegclie
nt.gPagegRef.:g C:1-3
Objective:g g 2
5) Whengshouldgoralgclientgcommunicationsgbegfollowedgupgingwriting?
Answer:g Writtengcommunicationsgaregrecommendedgingimportant,gunusual,gsubstantial
gdollargvalue,gorgcomplicatedgtransactions.
PagegRef.:g C:1-
5gObjective:g 2
LO3:g g ImportancegofgthegFactsgtogthegTaxgConsequences
1) Thegtaxgconsultantgcanggivegangopiniongongagtaxgfactgpatterngwithoutgallgthegf
acts.gAnswer:g FALSE
Explanation:g Taxgpractitionergshouldgnotgprovidegangopiniongwithoutgallgrelevantgfacts.
gPagegRef.:g C:1-6
Objective:g g 3
2) Taxgcompliancegisgthegbiggestgcomponentgofgagtaxgpracti
ce.gAnswer:g FALSE
Explanation:g Taxgconsultinggisgthegbiggestgcomponentgofgtaxgpractice
.gPagegRef.:g C:1-6
Objective:g g 3
LO4:g g ThegSourcesgofgTaxgLaw
1) ThegInternalgRevenuegCodegofg1986gcontainsgthegcurrentgversiongofgthegtaxgl
aw.gAnswer:g TRUE
Explanation:g Theglastgupdategwasg198
6.gPagegRef.:g C:1-8
Objective:g g 4
2) RegulationsgissuedgpriorgtogtheglatestgtaxglegislationgdealinggwithgagspecificgCodegsectiongare
gstillgeffectivegtogthegextentgtheygdognotgconflictgwithgthegprovisionsgingthegnewglegislation.
Answer:g g TRUE
Explanation:g PergIRCgthisgremainsgaccurate.gP
agegRef.:g C:1-9
Objective:g g 4
4
Copyrightg©g2023gPearsongEducation,gInc
.
mynursytest.store
