Tax Savings Achieved by Operating a Business Through a Pass-Through

question 26

True/False

Tax savings achieved by operating a business through a pass-through entity,rather than as a C corporation,is an example of entity variable tax planning.

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Definitions:

Cross-over Rate

The Cross-over Rate is the point at which two different projects or investments have the same net present value or rate of return, used in capital budgeting to compare projects.

Initial Cash Outlay

The total amount of money required upfront to initiate a project, investment, or venture.

Discount Rate

This is the interest rate used in DCF evaluations to establish the current value of expected future cash inflows.

After-tax Cash Inflows

The amount of money a company receives from its operations after all tax obligations have been paid.