A and B are obviously wrong, which makes D wrong, so I'd go with C. Instead of "creatively argumented" a better answer would be "supported by substantial authority," but that isn't a choice.
A couple of test taking tips for those who need to test for the RTRP: Do use the process of elimination, as I just did above. Also, accept the fact that there will be some questions you just can't answer. Don't waste time on them. Mark them and go back if there is time. If time is running out, just pick any answer. You have a 25% chance of being right in this case.
Thanks Wishful, it's what I choose, but I still don't feel comfortable with the answer, even if it is the only obvious one. My thinking due to this question and a half dozen others, was the person that wrote the test did not have English as their first language. Can you imagine taking a tax prep job to be argumentative by being creative towards the rules? YES, there are grey areas and I watched Block defend them over my career, but creatively argumented can also be considered frivolous.
This question was seeking employment, meaning being creative with a client's return, not their own return. Imagine hiring 10 of these employees, that took a tax prep job because they want to argue the rules, what a mess it would create for the employer!