Which of the Following Statements Is FALSE

question 50

Multiple Choice

Which of the following statements is FALSE?

• A)Unlike taxes on capital gains or interest income,which are paid annually,taxes on dividends are paid only at the time the investor sells the stock.
• B)Deferring the payment of capital gains taxes lowers the present value of the taxes,which can be interpreted as a lower effective capital gains tax rate.
• C)Investors with longer holding periods or with accrued losses face a lower tax rate on equity income,decreasing the effective tax advantage of debt.
• D)Investors with accrued losses that they can use to offset gains face a zero effective capital gains tax rate.

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Definitions:

Net Income

The sum a company holds as profit once it has subtracted expenses and taxes from its aggregate revenue.

Net Sales

The amount of sales revenue left after deducting sales returns, allowances, and discounts.

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, respectively.

Earned Revenues

Income generated from the normal business operations after the delivery of goods or services to customers.