Question

Which of the following are the two pervasive judicial doctrines that often limit the taxpayer's ability to employ effective planning techniques?

a. the progressive tax rate requirement and marginal rates.
b. business purpose and substance over form.
c. business purpose and changing tax jurisdiction.
d. All of the above are judicial doctrines that limit effective tax planning.

Answer 1

The two pervasive judicial doctrines that often limit the taxpayer's ability to employ effective planning techniques are business purpose and substance over form.

Step-by-step explanation:

There are two pervasive judicial doctrines that often limit the taxpayer's ability to employ effective planning techniques: business purpose and substance over form. The business purpose doctrine states that a transaction must have a legitimate business purpose, and cannot be solely done for tax avoidance. The substance over form doctrine looks at the economic reality of a transaction rather than its legal form. Both of these doctrines aim to prevent taxpayers from using planning techniques solely for the purpose of reducing their tax liability.