Answered: doctrine is applied to deny favorable…

doctrine is applied to deny favorable tax consequences to a transaction that never actually occurred but is represented by the taxpay

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 16Q

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Question

True or False

The substance over form doctrine is applied to deny favorable tax consequences to a transaction that never actually occurred but is represented by the taxpayer to have transpired.

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If a U.S. Tax Court agrees with the taxpayer on appeal that the IRS position was largely unjustified, which of the following is correct? The taxpayer must still pay administrative and litigation costs. The taxpayer may recover administrative but not litigation costs. The taxpayer may recover litigation but not administrative costs. To be eligible to recover some of the administrative and litigation costs, the taxpayer must have tried to resolve the case administratively, including going through the appeals process, and must have given the IRS the information necessary to resolve the case. None of the above.
1. It is the exploitation by the taxpayer of legally permissible alternative tax rates or methods of assessing taxable property or income in order to avoid or reduce tax liability. a. Capitalization b. Shifting c. Evasion d. Avoidance
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