A Taxpayer Is Allowed to Change the Structure of a Transaction

question 14

True/False

A taxpayer is allowed to change the structure of a transaction for the sole purpose of avoiding taxes, even though the change in structure has no other economic effect.

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Definitions:

Voting Shares

Shares that give the shareholder the right to vote on company matters, such as electing the board of directors, at shareholder meetings.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operational costs, indicating its profitability over a specific period.

Securitization

The process of converting assets, often illiquid, into marketable securities.

Structured Entity

A legal entity with a specific purpose, restricted operations, and a limited scope of activities, often created for securitization, investment, or to hold assets.