Question

In: Accounting

Which of the following statements is correct with regard to business tax calculation? When determining a...

Which of the following statements is correct with regard to business tax calculation?

		When determining a corporation’s taxable income, all of the expense items are 100% deductible.
		Net operating losses can be carried back to the past three years and carried forward to the next 15 years.
		Alternative Minimum Tax system applies to small companies and low-income taxpayers.
		Dividend and long-term capital gains usually are levied at a flat tax rate which is comparatively high.

Expert Solution

Answer -

Statement No 3 is True.

Pls refer to below explaination.

Statement No.1

When determining a corporation’s taxable income, all of the expense items are 100% deductible. expenses are not allowed 100% as deduction. This statement is false.

Business expenses are allowed, that too not 100% but with some limits.

Statement No 2.

Net operating losses can be carried back to the past three years and carried forward to the next 15 years. Statement is False

Recently law on carry forward of net operating losses has changed. Limitation of 20 years carryforward has been removed.

Statement No. 3

Alternative Minimum Tax system applies to small companies and low-income taxpayers. This statement is True.

After certain taxable limits Alternate Minimum Tax benefits phased out.

Statement No 4

Dividend and long-term capital gains usually are levied at a flat tax rate which is comparatively high.

This statement is false.

Dividend and long term capital gain are taxed at low rates, not higher tax rate.

ekkarill92 answered 2 years ago

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