Problem I: Explain the role of tax planning in the business environment. In writing this explanation, focus on the four maxims of tax planning
1. Tax costs decrease (and cash flows increase) when income is generated by an entity subject to a low tax rate.
2. In present value terms, tax costs decrease (and cash flows increase) when a tax liability is deferred until a later taxable year.
3. Tax costs decrease (and cash flows increase) when income is generated in a jurisdiction with a low tax rate.
4. Tax costs decrease (and cash flows increase) when income is taxed at a preferential rate because of its character).
And the six steps in tax law research (Step 1: Understand the Client's Transaction and Ascertain the Facts, Step 2: Identify the Tax Issues, Problems, or Opportunities Suggested by the Facts and Formulate Specific Research Questions, Step 3: Locate Relevant Tax Law Authority, Step 4: Analyze Relevant Authority and Answer the Research Questions, Step 5: Repeat Steps 1 through 4 as Many Times as Necessary! And Step 6: Document Your Research and Communicate Your Conclusions)
Problem II: Briefly evaluate the three tax research sources you identified and recommend the one you consider the best.
Problem III: Analyze the role of ethics in tax planning. In particular, think about the differences between tax avoidance and tax evasion.