When a taxpayer contacts a tax advisor requesting advice as to the most advantageous way to dispose of a stock, the tax advisor is faced with

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The taxpayer's request creates an open-fact situation because the tax advisor will need to gather additional information about the stock and the taxpayer's financial situation before providing advice on the most advantageous way to dispose of it. A closed-fact situation involves an issue of law that has already been resolved, while a restricted-fact situation involves a partial set of facts that limit the advisor's ability to provide a complete analysis. A recognized-fact situation does not exist as a term in tax law or practice.

When a Taxpayer Contacts a Tax Advisor Requesting Advice as to the Most