Which, If Any, of the Following Provisions of the Tax

question 180

Multiple Choice

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

• A)Penalties are imposed for failure to file a return or pay a tax on time.
• B)Prepaid income is taxed in the year received and not in the year earned.
• C)Annual adjustments for indexation increases the amount of the standard deduction allowed.
• D)Casualty losses must exceed 10% of AGI to be deductible.
• E)A deduction is allowed for charitable contributions.

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Definitions:

Operating Cash Flow

The total amount of cash generated by a company's normal business operations.

Noncash Deductions

Expenses that reduce a company's taxable income but do not involve an actual cash outflow, such as depreciation and amortization.

Net Working Capital

Represents the difference between a company's current assets and current liabilities, indicating the liquidity of the business.

Pro Forma Statements

Financial statements that project the future financial performance of a company, based on certain assumptions.