If a taxpayer decides to take advantage of an ambiguous tax issue to reduce future tax costs, the decision increases:

Question

Quizplus · Accepted Answer

Taking advantage of an ambiguous tax issue increases audit risk for the taxpayer, as the tax authority may challenge or audit the taxpayer's tax return, resulting in additional costs and potential penalties or interest. Additionally, taking advantage of ambiguous tax issues may also increase financial risk if the tax position is ultimately deemed incorrect and requires the taxpayer to pay back taxes, penalties, and interest. However, it does not necessarily increase tax law uncertainty or marginal tax rate uncertainty.

If a Taxpayer Decides to Take Advantage of an Ambiguous