Preview Questions Tax Lawyer | Role Specific Skill

Question 1: How should a Tax Lawyer assess the tax implications of "business entity structure" (e.g., LLC, corporation, partnership) for new ventures?

Which action should you take?

Choose only one option

Assume that a corporation is always the best structure for tax purposes, regardless of the business's needs

Disregard the impact of state and local taxes, assuming federal tax considerations are sufficient

Focus solely on the business structure's operational efficiency and ignore tax consequences

Evaluate the entity's tax classification, income distribution, self-employment taxes, and eligibility for deductions or credits in each structure

Question 2: What is the "limitation on benefits" (LOB) clause in tax treaties?

Which action should you take?

Choose only one option

It defines the income tax liability for residents of the treaty country

It ensures that only entities with substantial business operations in a country can benefit from the tax treaty

It excludes capital gains from taxation

It sets a minimum threshold for tax payments in the treaty country

Question 3: How should a Tax Lawyer address the tax implications of corporate debt vs. equity financing?

Which action should you take?

Choose only one option

By advising clients to avoid debt financing entirely to minimize tax complications

By considering the tax-deductibility of interest on debt versus the non-deductibility of dividends on equity

By recommending that a corporation only use equity financing to avoid interest deductions

By treating both debt and equity financing in the same manner for tax purposes

Question 4: What is the role of "burden of proof" in tax litigation?

Which action should you take?

Choose only one option

It dictates the maximum penalty for tax fraud

It determines the tax rate applied in a particular case

It defines which party is required to prove the elements of the case

It restricts the introduction of certain evidence

Question 5: What is the key provision of the "Tax Cuts and Jobs Act" (TCJA) that impacts corporate taxation?

Which action should you take?

Choose only one option

The imposition of new taxes on foreign bank accounts

A reduction in the corporate tax rate from 35% to 21%

The introduction of tax credits for domestic income only

The elimination of tax exemptions for multinational corporations

Question 6: How should a Tax Lawyer address "penalties for underpayment of taxes" in the context of tax litigation?

Which action should you take?

Choose only one option

Disregard the penalty and focus solely on the tax owed

Assume that penalties can be reduced automatically without presenting a valid reason

Assess the reason for the underpayment, seek to reduce penalties through reasonable cause or other exceptions, and negotiate a settlement with the IRS

Focus only on contesting the tax liability and disregard the penalty structure