What Is the IRS Guideline for Determining Whether a Tax

question 23

Multiple Choice

What is the IRS guideline for determining whether a tax return position has substantial authority?

• A)A person knowledgeable in the tax law concludes that the position has a something less than 50% likelihood of being supported.
• B)A person knowledgeable in the tax law concludes that the position has at least a 50% likelihood of being supported.
• C)A person knowledgeable in the tax law concludes that the position has at least a two-thirds likelihood of being supported.
• D)A person knowledgeable in the tax law concludes that the position has at least a 75% likelihood of being supported.

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Definitions:

Convexity

A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes.

Modified Duration

A measure that estimates the price sensitivity of a bond to a one percent change in interest rates, adjusting for the changing yield to maturity.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures.

Duration

A measure of the sensitivity of the price of a bond or other fixed-income investment to changes in interest rates, typically expressed in years.