Tax Doctrines and Rules
Requires that a transaction have a valid purpose other than simply tax avoidance.
What is the business purpose doctrine?
This is the goal of tax planning.
What is to maximize after-tax returns?
Gifts and inheritances are ___________ from the recipient's taxable income.
What is excluded?
_________ drafts federal tax law.
Who is Congress?
Allows the IRS to collapse a series of transactions into one to determine the tax consequences of a transaction.
What is the step transaction doctrine?
These are the four tax planning variables.
What are entity, character, timing and jurisdiction?
Up to ____% of Social Security benefits may be taxable for higher income individuals.
What is 85%?
This is the most common type of IRS audit.
What is a correspondence audit?
Taxpayer must recognize income when it is made available to them.
What is the constructive receipt doctrine?
Deferral is most valuable when the taxpayer expects to be in a ______ tax bracket in the future.
What is lower?
Capped at $10,000 per taxpayer.
What is the deduction for state and local taxes?
These legal settlements are generally NOT taxable.
What are settlements for personal physical injury or sickness?
Assigns a score to each tax return representing the probability that tax liability on the return has been under-reported.
What is the IRS DIF system?
Income is taxed to the taxpayer who actually earns it (owns underlying property or performs service).
What is the assignment of income doctrine?
What is higher?
Strategy used by taxpayers who anticipate not itemizing every year, allowing them to take the standard every other year or so.
What is bunching itemized deductions?
This needs to be calculated to determine the taxable portion of an annuity.
What is the exclusion ratio?
What is substantial authority?