Certain Skills Are Necessary for Successful Tax Planning

question 3

Multiple Choice

Certain skills are necessary for successful tax planning.One of these skills is applying the time value of money.Which of the following is FALSE regarding this skill?

• A)Applying the time value of money is a tool used for wealth accumulation.
• B)If a taxpayer invests $1,000 at 8% and subsequently earns $48 in after-tax income on the investment at the end of the first year, the taxpayer's tax rate is 40%.
• C)If a taxpayer earns an annual return of 12% and is subject to a 40% tax rate, the annual after-tax return is 4.8%.
• D)If a taxpayer invests $1,000 for one year at a rate of return of 14% and is subject to a 45% tax rate, the after-tax value of the investment will be $1,077.

---

Definitions:

Throat

Part of the neck in front of the spinal column that contains the pharynx and larynx, allowing for passage of food to the esophagus and air to the lungs.

Albert Einstein

A theoretical physicist renowned for developing the theory of relativity, one of the two pillars of modern physics, and making significant contributions to the field of quantum mechanics.

Gandhi

A preeminent leader of the Indian independence movement in British-ruled India, known for his philosophy of nonviolent resistance.

Flesh And Blood

A phrase used to emphasize that someone is a living human being with emotions and vulnerabilities, often used in a familial context.