Which of the Following Is NOT Something the CPA Should

question 92

Multiple Choice

Which of the following is NOT something the CPA should do in tax planning?

• A) Uncritically accept the client's explanations for assumptions and representations
• B) Establish the relevant background facts
• C) Consider the reasonableness of the assumptions and representations
• D) Consider the business purpose and economic substance of the transaction, if relevant to the tax consequences of the transaction

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Definitions:

Profit

The difference between total revenue and total cost.

Rent

Payment made by a tenant to a landlord for the use of a property, room, or apartment for a specified period.

Monopoly Profits

Extraordinary profits earned by a monopoly due to its unique position of having no competition, allowing for higher prices and lower production.

Miracle Drug

A term for a medication that has an unexpectedly profound and beneficial effect on patients.