Which of the Following Statements About Tax Deferral Is True

question 4

Multiple Choice

Which of the following statements about tax deferral is true?

• A)The value of tax deferral increases as the taxpayer's discount rate for computing NPV decreases.
• B)Tax deferral is not an effective planning strategy if the taxpayer's marginal tax rate is stable over time.
• C)The greater the length of time that the payment of a tax is deferred,the less the tax costs in NPV terms.
• D)Both A and C are true.

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Definitions:

Household Production

The creation of goods and services within a home for personal use, employing family labor and resources.

Child Care

The care and supervision of a child or multiple children at a time, whose ages can range from two weeks to eighteen years. Child care is the action or skill of looking after children by a day-care center, nannies, babysitter, teachers, or other providers.

Private Goods

Products and services that are exclusive and distinctly owned, with their use limited to the owner or individuals who have permission.

Corporate Form

A business structure where owners have limited liability, and the entity is recognized legally as separate from its owners.