13. At tax time, April 2014, a client asks you to determine if the gift of stock that he made to his alma mater on December 31, 2013, is deductible.

This is an example of compliance research.

This is an example of planning research.

This is an example of open-ended research.

This is an example of policy research.

15. Taxable income differs from financial accounting income in that:

it requires a change in the taxpayer's net worth.

it does not require a realization event.

it always requires the taxpayer to match income and expenses.

None of the above.

18. Our tax system is designed primarily to raise revenues so that the government may provide for the public good. As a result, in computing income that is subject to tax, the following proposition applies:

Expenses incurred in producing taxable income are fully deductible even if they are illegal.

Expenses incurred for personal reasons are never deductible.

Expenses are a matter of legislative grace and as a consequence are not deductible unless a specific code provision permits their deductibility.

Expenses incurred for the production of income are not deductible, but trade or business expenses are deductible.

24. The Service would be allowed to re-allocate income and deductions between related parties under Code Sec. 482 in the following transaction:

A U.S. parent pays fair rental value for a building it leases from a foreign subsidiary.

A foreign subsidiary pays a U.S. parent a market rate of interest on a loan given to it by the parent.

A foreign subsidiary pays a U.S. parent corporation a reduced license fee for use of its patented production process.

A U.S. parentpays an arm's length price for the goods it purchases from its foreign subsidiary.