BMX Company Engaged in a Current-Year Transaction That Generated a $20,000

question 7

Multiple Choice

BMX Company engaged in a current-year transaction that generated a $20,000 cash inflow.Which of the following statements is false?

• A)If the cash inflow is not taxable income,the current-year tax cost of the transaction is zero.
• B)If the cash inflow is taxable income and BMX's marginal tax rate is 25%,the tax cost of the transaction is $5,000.
• C)If the cash inflow is taxable income and BMX's marginal tax rate is 35%,the tax cost of the transaction is $7,000.
• D)None of the above is false.

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Definitions:

Payment Of Dividends

The distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Managerial Employees

Employees who are responsible for directing and controlling the operations of a business or its subdivisions.

Quorum Requirements

The minimum number of members that must be present at a meeting to legally conduct business.

Venture Capitalizing

The process of providing funding to early-stage, high-potential startups and companies.