The IRS scrutinizes related party transactions more carefully than transactions occurring in a public market.

Question

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Related party transactions involve parties with a close relationship, such as family members or business associates, and may present a higher risk of tax avoidance or abusive tax schemes. Therefore, the IRS may examine such transactions more thoroughly to ensure compliance with tax laws. Transactions occurring in a public market, on the other hand, may be subject to market forces and regulations that help ensure fairness and transparency.

The IRS Scrutinizes Related Party Transactions More Carefully Than Transactions