The Business Purpose Doctrine Allows the IRS to Collapse a Series

question 41

True/False

The business purpose doctrine allows the IRS to collapse a series of intermediate transactions into a single transaction to determine the tax consequences of the arrangement in its entirety.

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Definitions:

Operant Conditioning

A learning process in which the strength of a behavior is modified by its consequences, such as reward or punishment.

Extinction

Within the field of psychology, a conditioned response gradually fades and ultimately vanishes.

Unconditioned Stimulus

Within the framework of classical conditioning, a stimulus inherently and spontaneously elicits a reaction without the necessity of prior learning.

Negative Punishment

A form of behavioral control that involves the removal of a desirable stimulus following a behavior to decrease the likelihood of that behavior occurring again.