1.Think about the primary difference between tax avoidance and tax evasion. Define and provide an example of each, and compare/contrast the typical consequences a taxpayer can expect from the Internal Revenue Service when s/he engages in either of the behaviors. In your response, identify the legal doctrines that the IRS typically uses to challenge a tax planning strategy.

2.Explain what is meant by an implicit tax. Define an implicit tax, and illustrate the concept by showing how a taxpayers marginal tax rate will determine whether s/he should invest $10,000 in a fully taxable corporate bond generating pretax interest of 8%, or a municipal bond generating pretax interest of 6%. At what marginal tax rate will an investor be indifferent between the two options?