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Tax evasion is exercised to reduce the tax burden legally. False Effective tax planning may increase tax liability True Tax rules have no effects on the before tax rate of return .False Tax avoidance is legal but undesirable True Tax rules influence the financing decision of firms through their effect on the cost of financing the firm’s activities True Wealthy citizen’s duty is to pay more public revenue than the law demand. False In case of tax exemption, the after tax rate of return on an assets equal the pretax rate of return. True Tax avoidance is exercised to reduce the tax burden legally. True Taxing authority does conduct audits in taxpayers’ reported results. True Tax avoidance must ensure higher after-tax returns. False The higher the taxpayer’s marginal tax rate, the higher the returns to tax planning. False In case of tax exemption, an asset cannot escape explicit taxation. False Marginal tax rate cannot vary for income taxpayers’ having equal income. False All tax-planning actions are tempered by the nontax cots of achieving tax savings. True Investment and financing decision activities that high face explicit tax (due to disfavored treatment under the law tax) bear low implicit taxes. False…..confuse With a view to redistributing wealth and encouraging certain economics activities by subsidizing them, tax system discriminates the tax rates from one tax payers to others. True Most tax payers around the world pay no more tax than they behave the most. True Taxing authority claims a partnerships interest in taxpayers profit .True. Tax rules designed to motivate socially desirable activities often motivate transaction that reduce taxpayers’ tax liabilities but serve no social purpose…….. False The constructive-receipt doctrine basically prevents taxpayers from turning their backs on income they have already earned and could collect easily. True—confuse.

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