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Predicated on a tax court case, one of the below doctrines was disallowed. What strategy was employed and how was it conducted. based on several important doctrines. 1. The assignment of income doctrine - states that income must be taxed to the entity that renders the service or owns the capital with respect to which the income is paid. 2. The economic substance doctrine - holds that a transaction that changes the taxpayer’s economic situation only for the tax savings from the transaction can be disregarded by the IRS. 3. The business purpose doctrine - a transaction should not be effective or allowed for tax purposes unless it has a business purpose other than tax avoidance. 4. The step transaction doctrine - allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety US Tax laws are based on several important doctrines.
The income doctrine - states that income must be taxed to the entity that renders the service or owns the capital with respect to which the income is paid. The economic substance doctrine - holds that a transaction that changes the taxpayer’s economic situation only for the tax savings from the transaction can be disregarded by the IRS. The business purpose doctrine - a transaction should not be effective or allowed for tax purposes unless it has a business purpose other than tax avoidance. The step transaction doctrine - allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety. To perform professional tax planning, we adhere to several maxims. First we need to analyze the variables that determine the tax consequences of a transaction. Then we apply one or more of the following tax planning maxim strategies that reduce tax and enhance cash flows: Generate income in a lower tax rate entity – tax costs decrease. Defer taxes - shift income to a future year when rates are lower, or move expenses forward to the current year when tax rates are higher or they can decrease income. Generate income in a lower tax jurisdiction - tax costs decrease when income is taxed at a lower tax rate. Change the character of the revenue - tax costs decrease when income is taxed at a preferential rate because of its character.
Should the major decisions on resource depletion (especially energy policy) be made: By government experts? By scientific experts? By everyone? Provide and develop moral arguments in support of your judgment.
The Capital Asset Pricing Model asserts that the expected return
You have entered into a long position in the T-note futures of 5 contracts at a price of 125,000. The T-note Futures contract has a face value of $100,000 and trades in % and 32nd of 1%. The initial margin requirement for the contract is $1,430 and t..
Legion, Inc. is a small high tech firm whose stock trades on the NASDAQ. You want to estimate the stock's beta using a regression based on the empirical market line. That requires regressing the stock's returns against the contemporaneous returns on ..
What is the future value of $1,270 in 16 years assuming an interest rate of 9 percent compounded semi annually? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations.
Explain the concept of arriving at AIME. How do you compute the PIA? Please, give examples. Explain the concept of Medicare Part D. Please, give an example of what is the “Donut Hole?”
Calculate break-even in DOLLARS given the following information: sales per unit $40, variable costs $15, fixed costs $15,000, and desired profit $20,000.
Smith Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 12%. If smith has 65 million shares..
An American exporter has just sold €100,000 worth of shoes to a French customer. Payment is due in one year. Interest rates in dollars are 7.10 percent in the U.S. and 5 percent in the euro zone.
App Store Co. issued 16-year bonds one year ago at a coupon rate of 7.7 percent. The bonds make semi-annual payments. If the YTM on these bonds is 5.4 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer..
You are analyzing the after-tax cost of debt for a firm. You know that the firm’s 12-year maturity, 10.40 percent semi-annual coupon bonds are selling at a price of $1,189.84. These bonds are the only debt outstanding for the firm. What is the curren..
What is the value of firm L according to MM's proposition 1 with corporate taxes and micky is the holder of $30,000 worth of L's stock. What rate of return can he expect, assuming a dividend payout of 100%.
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