sFrom Cengage Ch 03: Assignment- Financial Statements, Cash Flow, and Taxes 8. T
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sFrom Cengage Ch 03: Assignment- Financial Statements, Cash Flow, and Taxes 8. The tax system Aa Aa Understanding taxes In general, is the US federal tax system progressive or regressive? O Progressive You bought 1,000 shares of Tund Corp. stock for $75.00 per share and sold it for $77.25 per share within the same year. How will your gain or loss be treated when you file your taxes? O As a capital gain taxed at the current ordinary-income tax rate O As a capital gain taxed at the long-term tax rate Depreciation expenses directly affect a company's taxable income. An increase in depreciation expense will lead to a taxable income. It will tax deducted from a company's earnings, thus leading to a of the Alternative Minimum Tax (AMT) According to a tax law established in 1969, taxpayers must pay the or regular tax. To offset taxable income in a given year, ordinary corporate operating losses can be: O Carried back for 2 years and carried forward for 20 years O Carried back for 5 years and carried forward for 10 yearsExplanation / Answer
US federal tax system is progressive as lower incomes are taxed less.
Since it is a short term gain it shall be taxed as ordinary income.
Hence first of the two options are correct.
Increase in depreciation shall lead to a decreasing taxable income. It will decrease tax deducted from earnings, thus leading to an increased operating cash flow.
tax payer must pay higher of the AMT
Carryforwards are allowed for 2 years back and 20 years forward
Hence first of the two options are correct
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