Dan receives a proportionate nonliquidating distribution

Answer: TRUE Difficulty: 2 Medium Topic: Timing Strategies Learning Objective: 03-02 Apply the timing strategy and describe its applications and limitations.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 16) The timing strategy becomes more attractive as tax rates decrease.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: BB Critical Thinking 9) The present value concept becomes more important as interest rates increase.

Answer: TRUE Difficulty: 2 Medium Topic: Timing Strategies Learning Objective: 03-03 Apply the concept of present value to tax planning.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 20) The constructive receipt doctrine is a natural limitation for the conversion strategy.

Answer: FALSE Difficulty: 2 Medium Topic: Conversion Strategies; Additional Limitations to Tax Planning Strategies: Judicial Doctrines Learning Objective: 03-05 Apply the conversion strategy, provide examples, and describe its limitations.; 03-06 Describe basic judicial doctrines that limit tax planning strategies.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 15) The timing strategy is particularly effective for cash basis taxpayers.

Answer: TRUE Difficulty: 1 Easy Topic: Timing Strategies Learning Objective: 03-02 Apply the timing strategy and describe its applications and limitations.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 6) The concept of present value is an important part of the timing strategy. .00 Difficulty: 2 Medium Topic: Timing Strategies Learning Objective: 03-03 Apply the concept of present value to tax planning.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: BB Critical Thinking 12) When considering cash outflows, higher present values are preferred.

Answer: FALSE Difficulty: 1 Easy Topic: Timing Strategies Learning Objective: 03-03 Apply the concept of present value to tax planning.

Bloom’s: Analyze AACSB: Analytical Thinking AICPA: BB Critical Thinking 11) When considering cash inflows, higher present values are preferred.