Tax Avoidance, Evasion, and Fraud
Learn the decision pattern the exam can test, then apply it to a realistic taxpayer fact pattern.
What changes the answer?
An aggressive result is not automatically fraud, but labels and disclosure cannot protect fabricated facts.
A tax-practice scenario
A client proposes a transaction with real economic terms but asks the EA to backdate records. Separate lawful planning from false execution.
Identify the taxpayer, entity, transaction, and tax period first. Write the controlling tests in order, apply only the relevant facts, and keep the reporting result separate from any planning recommendation.
Do not take this shortcut.
Focusing only on the tax savings instead of intent, facts, documentation, and economic substance.
Turn the rule into recall.
Ask what actually happened, when it happened, why, how it was documented, and what the return will state.
- ExplainState the governing distinction without notes.
- ApplyChange one fact in the scenario and predict the new result.
- RetrieveAnswer an unseen question, then review every option.
Official source and scope
This lesson follows the current PSI content outline and uses the IRS reference below for the underlying tax or practice framework. Always confirm current forms, instructions, thresholds, and effective dates before advising a taxpayer.