Which of the Following Activities Would Be Considered Tax Avoidance

question 56

Multiple Choice

Which of the following activities would be considered tax avoidance?

• A)increasing your level of charitable contributions in December
• B)selling illegal drugs on the street
• C)underestimating your income that is subject to taxation
• D)failure of a waitress to report all tips earned on the job
• E)buying a house and neglecting to deduct interest payments

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Definitions:

Common Fixed Costs

Costs that are shared among multiple product lines or departments within an organization and do not change with the volume of production.

Segment Performance

An analysis of a specific part of a company, such as a division or product line, to evaluate its contribution to the overall performance of the business.

Turnover

The rate at which a company's goods are sold and replaced, or an employee's leaving and being replaced.

Return on Investment

A measure of the profitability of an investment, calculated by dividing the net profit by the initial cost of the investment.