Which of the Following Statements About Implicit and Explicit Taxes

question 74

Multiple Choice

Which of the following statements about implicit and explicit taxes is false?

• A)The amount of implicit tax on an investment depends on the owner's marginal tax rate.
• B)The taxpayer pays an explicit tax to the taxing jurisdiction.
• C)An investment yielding ordinary income taxed at the regular tax rates should not have an implicit tax.
• D)None of the above is false.

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Definitions:

Construction

The process or art of building structures, such as buildings, bridges, or roads.

Actual Borrowings

Actual borrowings refer to the actual amount of funds a company or individual has borrowed from lenders or financial institutions, as opposed to planned or potential borrowing amounts.

Capitalize

The process of recording an expenditure as an asset, rather than an expense, thus spreading the cost over its useful life.

Construction Loan

A short-term loan provided to finance the building of a property or real estate project, with the property itself usually serving as collateral.