Which of the following statements concerning related party transactions is false?

Question

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The federal tax law does not prohibit related party transactions. However, it imposes strict rules to ensure that such transactions are conducted at arm's length and do not result in tax avoidance or manipulation. B is also incorrect, as related parties are subject to specific tax rules that limit their flexibility in controlling tax consequences. C is generally true, as transactions between related parties are often not conducted at arm's length and may not reflect true market conditions. D is partially incorrect, as the IRS may disallow certain tax benefits of related party transactions if they do not meet the requirements of the tax law.

Which of the Following Statements Concerning Related Party Transactions Is