If a Corporation Cannot Use Its Interest Payments as a Tax

question 39

Multiple Choice

If a corporation cannot use its interest payments as a tax shield for a particular year because it has suffered a loss, it is still possible to use the tax shield because

• A)the carry-back provision allows corporations to carry back the loss and receive a tax refund up to the amount of taxes paid in the previous two years.
• B)the carry-forward provision allows corporations to carry forward the loss and use it to shield income in subsequent years.
• C)the carry-back provision allows corporations to carry back the loss and receive a tax refund up to the amount of taxes paid in the previous two years and allows corporations to carry forward the loss and use it to shield income in subsequent years.
• D)the firm will lose the tax shield.

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Definitions:

Service Dominant Logic

A perspective that sees service, rather than goods, as the fundamental basis of exchange and views all economic activity as service.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, traditionally categorized as product, price, place, and promotion.