Tax Planning Involves the Timing of Income and Deductions

question 63

Multiple Choice

Tax planning involves the timing of income and deductions. General rules of thumb to follow when planning include
I.deferring recognition of income.
II.putting deductions into the year with highest marginal tax rate.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Expected Return

The expected return is the anticipated profit or loss from an investment over a specified period, based on historical or projected rates.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of an investment.

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates higher than market volatility.

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of investing in the stock market.