Question

In a closed-fact problem, the main goal of tax research is to:

a. determine several alternative courses of future action for the taxpayer
b. find support for an action the taxpayer has already taken
c. both a and b
d. none of the above

Answer 1

The goal of closed-fact tax research is to find support for an action the taxpayer has already taken, seeking to defend a reported tax position or action.

Step-by-step explanation:

In a closed-fact tax research problem, the main goal is b. to find support for an action the taxpayer has already taken. This type of research is conducted after the fact and seeks to substantiate a tax position already reported on a tax return or an action that a taxpayer has completed. It involves looking for legal precedents, tax codes, and rulings that justify the taxpayer's decision. The purpose is not to determine alternative courses of action, which is common in open-fact situations where planning for future tax implications is the key objective. Instead, closed-fact tax research aims at defending a position in case of an audit or clarification.