Test Bank for Pearson’s Federal Taxation 2019 Corporations, Partnerships, Estates and Trusts, 32nd Edition, Timothy J. Rupert, Kenneth E. Anderson, ISBN10: 0134855485, ISBN-13: 9780134855486, ISBN-10: 0134739698, ISBN-13: 9780134739694

Test Bank for Pearson’s Federal Taxation 2019 Corporations, Partnerships, Estates and Trusts, 32nd Edition, Timothy J. Rupert, Kenneth E. Anderson, ISBN10: 5, ISBN-13: 5486, ISBN-10: 8, ISBN-13: 9694 Pearson's Federal Taxation 2019: Comprehensive, 32e (Rupert/Anderson) Chapter C1: Tax Research LO1: Overview of Tax Research 1) Tax planning is not an integral part of open-fact situations. Answer: FALSE Page Ref.: C:1-2 Objective: 1 2) When a taxpayer contacts a tax advisor requesting advice as to the most advantageous way to dispose of a stock, the tax advisor is faced with A) a restricted-fact situation. B) a closed-fact situation. C) an open-fact situation. D) a recognized-fact situation. Answer: C Page Ref.: C:1-2 Objective: 1 3) Investigation of a tax problem that involves a closed-fact situation means that A) the client's transactions have already occurred and the tax questions must now be resolved. B) the client's tax return has yet to be filed. C) future events may be planned and controlled. D) research is primarily concerned with applying the law to the facts as they exist. Answer: A Page Ref.: C:1-2 Objective: 1 4) Explain the difference between a closed-fact and open-fact situation. Answer: In a closed-fact situation, the transaction has occurred and the facts are not subject to change. In an open-fact situation, the transaction is in the formative or projected stage, and the taxpayer is able to structure the facts so that the tax consequences of the transaction can be more favorable. Page Ref.: C:1-2 Objective: 1 5) In all situations, tax considerations are of primary importance. Do you agree or disagree? Support your answer. Answer: It is important to consider nontax objectives as well as tax objectives. For instance, if a wealthy client wants to minimize her estate taxes while passing the greatest value possible to her descendants, you would not suggest that she leave the majority of her estate to charity and only a few hundred thousand dollars to her descendants. Although this would reduce her estate tax liability to zero, it would be inconsistent with her objective of allowing her descendants to receive as much after-tax wealth as possible. Page Ref.: C:1-2; Example C:1-2 Objective: 1