a. Stage 4.

By considering this to be inappropriate deduction because it could violate the tax laws demonstrates my
concern for following the law, and hence influence my decision to encompass society as a whole. Laws are
important expression of societal values and that one should abide by the laws.
b. Stage 6. My reasoning adheres to inner conscience because tax laws did not contemplate circumstances such as
that one in which the purpose of the buyback was to get rid of an officer-shareholder whose decision were
harmful to profitability of the company. So my act is in accordance with integrity and justice and reflects a belief
that laws do not have to be complied if justice so demands.
c. Stage 1. The risk of punishment takes precedence in this case, and my decision to claim this deduction is based
on my own self-interest, and the self concern for punishment, and the decision is not concerned with the right
thing or following the law.
d. Stage 2. Here I am assessing the risk of punishment and is focused on the good faith argument in favor of
claiming the deduction, that will minimize the magnitude of any punishment, and that IRS is unlikely to impose
severe penalties, or at least, the punishment is proportionate to the severity of misconduct.
e. Stage 3. Here, I am concerned with desire to please senior management, as this decision is carried forward to
please senior management.