If a Corporation Cannot Use Its Interest Payments to Get

question 64

Multiple Choice

If a corporation cannot use its interest payments to get tax shield for a particular year because it has suffered a loss, it is still possible to get the tax shield because of the:
I. carry back provision that allows corporations to carry back the loss and receive a tax refund up to the amount of taxes paid in the previous two years.
II. carry forward provision that allows corporations to carry forward the loss and use it to shield income in subsequent years.

• A) I only
• B) II only
• C) I and II
• D) none of the above

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Definitions:

Piaget

A Swiss psychologist known for his theory of cognitive development, suggesting that children move through a series of stages as they grow and learn.

Succeed

To achieve a desired goal or endeavor, often through effort or skill.

Equilibration

The creation of an equilibrium, or balance, between assimilation and accommodation as a way of incorporating new events or knowledge.

Cognitive Dissonance

A psychological discomfort experienced when holding two or more conflicting cognitions, beliefs, or values simultaneously.