Which Statement Is Incorrect with Respect to a Tax Treaty

question 6

Multiple Choice

Which statement is incorrect with respect to a tax treaty?

• A)A tax treaty always overrides a Code section when they conflict.
• B)The purpose of a treaty is to render mutual assistance in tax enforcement and to avoid double taxation.
• C)Taxpayers must disclose on their tax returns any position where a treaty overrides a Code section.
• D)There is a $1,000 penalty per failure to disclose a conflicting tax treaty.
• E)All are correct.

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Definitions:

Billionaires

Individuals whose net worth or wealth is equal to or exceeds one billion units of a currency.

Income

The financial earnings received by an individual or entity, typically measured over a set period of time, from work (wages) or investments (interests, dividends).

Government Transfer Payments

Money payments made by the government to individuals without any goods or services being exchanged, intended to redistribute income and support welfare.

Wages

Compensation paid to employees for their labor, usually in the form of money, and typically on an hourly, daily, or piecework basis.