Summary Test Bank:
Spilker Ind 2026:
Chapter 3: Tax
Planning Strategies
and Related
Limitations
There are three basic tax planning strategies that represent the building blocks of tax
planning. These strategies include ______ income shifting, and______. - answer-
Timing
conversion
A $1 today is worth __________ than $1 in the future. - answer- MORE
When tax rates are constant, taxpayers should ______ tax deductions and ______
recognizing taxable income. - answer- ACCELERATE
DEFER
Which one of the following statements is CORRECT regarding the timing strategy? -
answer- It is best to recognize deductions in high-tax-rate years and income in low-tax-
rate years.
Which of the following taxpayers is using an income shifting tax planning strategy? -
answer- Tori (33% marginal tax rate) gave several of her investments to her daughter
so that the income will be taxed at the daughter's lower tax rate.
The tax planning strategy that involves deferring or accelerating taxable income and tax
deductions is: - answer- timing
In order for a related-party transaction to be acceptable to the IRS, it should be
structured as a(n)______ ______ - answer- ARMS LENGTH
Spilker Ind 2026:
Chapter 3: Tax
Planning Strategies
and Related
Limitations
There are three basic tax planning strategies that represent the building blocks of tax
planning. These strategies include ______ income shifting, and______. - answer-
Timing
conversion
A $1 today is worth __________ than $1 in the future. - answer- MORE
When tax rates are constant, taxpayers should ______ tax deductions and ______
recognizing taxable income. - answer- ACCELERATE
DEFER
Which one of the following statements is CORRECT regarding the timing strategy? -
answer- It is best to recognize deductions in high-tax-rate years and income in low-tax-
rate years.
Which of the following taxpayers is using an income shifting tax planning strategy? -
answer- Tori (33% marginal tax rate) gave several of her investments to her daughter
so that the income will be taxed at the daughter's lower tax rate.
The tax planning strategy that involves deferring or accelerating taxable income and tax
deductions is: - answer- timing
In order for a related-party transaction to be acceptable to the IRS, it should be
structured as a(n)______ ______ - answer- ARMS LENGTH
