Which of the Following Statements Best Describes the Process of Tax

question 50

Multiple Choice

Which of the following statements best describes the process of tax planning?

• A)Tax planning is equivalent to tax evasion.
• B)Tax planning is the avoidance of "tax traps."
• C)Tax planning is the process of arranging one's financial affairs to minimize one's overall tax liability.
• D)Tax planning is the deferral of tax on income.
• E)Tax planning is the calculation of a taxpayer's marginal rate of tax.

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Definitions:

Rate of Interest

The percentage of a sum of money charged for its use, typically expressed as an annual rate.

Account

An arrangement with a financial institution for the deposit and withdrawal of money.

Double Your Money

A colloquial term referring to an investment strategy or opportunity that aims to increase the initial investment by 100%.

Rate of Interest

The percentage charged on the total amount that borrowers pay for loans or earn on deposits, over a period of time.