Exam 19: The Corporation Tax

When one company is owned by a corporation but is chartered separately from the parent company,this is

The excess burden of the corporate income tax is

Which one of these statements concerning the Tax Reform Act of 1986 is false?

A plausible elasticity of investment with respect to the user cost is

For corporate taxes,the lowest tax bracket is

A proprietorship is one with a single owner and unlimited liability.

Stockholders have limited liability for the acts of the corporation for which they hold stock.

For firms,dividends are not deductible.They are,however,taxed preferentially at the individual level.

Interest deductibility does not provide an incentive for debt finance.

Large firms sometimes have manufacturing and development that take place in multiple states.Should they be subject to taxation in every state in which they do business?

This question is similar to Question 9 of Chapter 19 in your textbook.The ABC Corporation is contemplating purchasing a new computer system that would yield a before-tax return of 30 percent.The system would depreciate at a rate of 3 percent per year.The after-tax interest rate is 11 percent,the corporation tax rate is 35 percent,and a typical shareholder of ABC has a marginal tax rate of 30 percent.Assume for simplicity that there are no depreciation allowances or investment tax credits.Do you expect ABC to buy the new computer system?

The difference between revenues and expenditures for inputs is known as

U.S.multinational corporations are allowed tax _________ for taxes paid to foreign governments.

Profits earned by subsidiary are taxed even if it is not repatriated to the parent company as dividends because they are considered as income for the parent company.

According to research,after the Tax Reform Act of 1986,the effective marginal tax rate on equipment has

When each stockholder incurs a tax liability on his or her share of the earnings of a corporation (whether or not the earnings are distributed),this is known as

In the short run,a tax on economic profits can be shifted.

Most states do

Suppose you are only concerned with national income maximization.You know that the marginal rate of return on foreign investment is 8 percent,but that the tax rate on foreign investment is 2 percent.What is the minimal tax rate necessary in the United States to maximize national income?

Oxnard Rims,Inc. ,has $5 million in assets and $2 million in debt.During the course of the year,it takes in $1 million in net revenue after deduction of all costs (except for interest)and incurs interest expenses of $500,000.Oxnard Rims,Inc. ,pays an average tax rate of 35% on its profit. Calculate the percentage return on equity after taxes for the corporation. If the market interest rate is 12.5%,do you think Oxnard Rims pleased its investor for the preceding year?