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Bloom’s: Analyze AACSB: Analytical Thinking AICPA: BB Critical Thinking 11) When considering cash inflows, higher present values are preferred.

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 18) The timing strategy becomes more attractive if a taxpayer is able to accelerate deductions by two or more years (versus one year).

Bloom’s: Analyze AACSB: Reflective Thinking AICPA: FN Decision Making 19) One limitation of the timing strategy is the difficulties in accelerating a tax deduction without accelerating the actual cash outflow that generates the tax deduction.

Answer: TRUE Explanation: Virtually every transaction involves the taxpayer, the other transacting party, and the government.

Difficulty: 2 Medium Topic: Basic Tax Planning Overview Learning Objective: 03-01 Identify the objectives of basic tax planning strategies.

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Bloom’s: Analyze AACSB: Analytical Thinking AICPA: BB Critical Thinking 10) Future value can be computed as Future Value = Present Value/(1 r)n.

Answer: FALSE Explanation: Future Value = Present Value × (1 r)n Difficulty: 2 Medium Topic: Timing Strategies Learning Objective: 03-03 Apply the concept of present value to tax planning.

Difficulty: 1 Easy Topic: Timing Strategies; Conversion Strategies Learning Objective: 03-02 Apply the timing strategy and describe its applications and limitations.; 03-05 Apply the conversion strategy, provide examples, and describe its limitations.

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