KRU Company Engaged in a Current-Year Transaction That Required a $20,000

question 67

Multiple Choice

KRU Company engaged in a current-year transaction that required a $20,000 cash outflow. Which of the following statements is true?

• A) If the cash outflow is deductible and BMX's marginal tax rate is 20%, the tax savings from the transaction is $4,000.
• B) If the cash outflow is deductible and BMX's marginal tax rate is 30%, the tax cost of the transaction is $6,000.
• C) If the cash outflow is not deductible, the current-year tax savings of the transaction is zero.
• D) All of the above are true.