1. Which of the following decreases the benefits of accelerating deductions?

Multiple Choice

A. Decreasing tax rates

B. Smaller after-tax rate of return

C. Larger after-tax rate of return

D. Larger magnitude of transactions

E. None of the choices are correct.

2. Which of the following does not limit the income-shifting strategy?

Multiple Choice

A. Assignment of income doctrine

B. Business purpose doctrine

C. Substance-over-form doctrine

D. Step-transaction doctrine

E. None of the choices are correct.

3. Which of the following is an example of the income-shifting strategy?

Multiple Choice

A. A corporation paying its shareholders a $20,000 dividend.

B. A corporation paying its owner a $20,000 salary.

C. A high tax rate taxpayer investing in tax-exempt municipal bonds.

D. A cash-basis business delaying billing its customers until after year-end.

E. None of the choices are correct.