Examination Process and Substantiation
Learn the decision pattern the exam can test, then apply it to a realistic taxpayer fact pattern.
What changes the answer?
A bank statement proves payment but may not prove business purpose, deductibility, or the proper year.
A tax-practice scenario
An examiner questions travel, basis, and dependency. Build a separate evidence package for each legal element.
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.
Sending boxes of records without connecting each document to a claimed item.
Turn the rule into recall.
Use an examination index linking issue, rule, amount, return line, evidence, witness, and explanation.
- 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.