Which of the Following Activities Would Be Considered Tax Avoidance

question 56

Multiple Choice

Which of the following activities would be considered tax avoidance?

• A)increasing your level of charitable contributions in December
• B)selling illegal drugs on the street
• C)underestimating your income that is subject to taxation
• D)failure of a waitress to report all tips earned on the job
• E)buying a house and neglecting to deduct interest payments

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Definitions:

Relevant Exchange Rates

The currency rates used to convert transactions involving foreign currencies into the reporting currency for financial reporting purposes.

Fair Value

The price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Cash Consideration

The total amount of cash that is paid or received during a transaction, such as buying an asset or settling a liability.

Net Realisable Value

The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.