Which of the following scenarios illustrates unacceptable tax planning?
A)Property transferred between Stan and Reed (arm's-length parties) is valued at fair market value.
B)Mr.A transfers his shares to his spouse and the dividends from the shares are included in Mr.A's income.
C)Faizan owns two corporations and undertakes legal steps in order to permit loss utilization between the two companies.
D)Ben transfers property to his child at a value less than fair market value.

Question

Quizplus · Accepted Answer

Transferring property to a child at a value less than fair market value is considered unacceptable tax planning as it is a form of tax evasion. This is because it is done with the intention of reducing the donor's tax liability by undervaluing the asset being transferred. This violates the principle of paying taxes based on the true value of the asset. The other options involve legitimate tax planning measures such as fair market valuations, proper inclusion of income, and loss utilization between two legally owned corporations.

Which of the Following Scenarios Illustrates Unacceptable Tax Planning