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Principles of Taxation

Business

Quiz 4 :

Maxims of Income Tax Planning

Quiz 4 :

Maxims of Income Tax Planning

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The after-tax value of a dollar of income to a high-tax entity is more than the after-tax value to a low-tax entity.
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True False
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False

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The goal of tax planning is to reduce tax costs or increase tax savings as much as possible.
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True False
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False

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The assignment of income doctrine constrains tax deferral strategies.
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True False
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False

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In the United States,individuals and corporations are the two entities that pay tax on business income.
True False
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A planning strategy that defers a tax cost without deferring the receipt of before-tax cash flows decreases the NPV of the transaction.
True False
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Corporations,LLCs,and partnerships are all taxable entities.
True False
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Tax avoidance is the reduction of a person's tax liability through illegal means.
True False
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The after-tax cost of a dollar of deductible expense to a high-tax entity is less than the after-tax cost to a low-tax entity.
True False
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A strategy to shift income from one taxpayer to a different taxpayer reflects the entity variable,while a strategy to shift income from one year to a different year reflects the time period variable.
True False
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Tax evasion is a federal crime punishable by imprisonment.
True False
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Both the individual and the corporate federal income tax rates are progressive.
True False
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Andrea Mitchell can shift income to her daughter,Lynn,by endorsing a check for $10,000 received for a client over to Lynn.
True False
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The tax law applies uniformly to every commercial transaction by every business entity.
True False
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According to the assignment of income doctrine,income must be taxed to the person receiving the cash from an income-generating transaction.
True False
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Opportunity cost refers to the decrease in NPV from a deferral of the receipt of before-tax cash flows.
True False
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Income-shifting transactions occur more frequently between related parties than between unrelated parties.
True False
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Deduction-shifting transactions usually occur between unrelated taxpayers.
True False
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Planning opportunities are created when the tax law applies differentially to alternative business transactions.
True False
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The time period variable is based on the time value of money.
True False
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The entity variable is important because the amount of taxable income generated by a business depends on the type of entity conducting the business.
True False
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