Individual managers may ignore the impact of taxes in their decision making since it is beyond their control.
True / False
False
A major difficulty for including taxation in the decision process of all managers is that our tax laws are extremely complex.
True / False
False
There are four fundamental tax variables to be considered in the business decision process. However, the interaction of these variables is even more important.
True / False
True
Applying tax law to business decisions means tax avoidance.
True / False
False
Analyzing alternative courses of action include computing the net present value of future cash inflows and outflows, net of tax.
True / False
True
It is not the nature of the service that determines whether or not one is employed.
True / False
True
If an employer wishes to deduct deferred compensation on an accrual basis, that compensation must be paid within 360 days of the fiscal year end in which the expense was incurred.
True / False
False
The capital portion of automobile benefits is normally based on the number of months that the automobile was made available to the employee rather than the number of kilometres driven.
True / False
True
An allowance may only be considered unreasonable if it is too high?
True / False
False
A home office deduction is permitted if that office is the place where the individual exclusively performs the duties of employment.
True / False
False
Through the use of contributions to spousal RRSP's, withdrawals during retirement can be equalized and, thus, income taxes minimized.
True / False
True
The denial of unreasonable salaries paid to related parties creates double taxation since an offsetting adjustment is not made to the related parties.
True / False
True
Property transferred to a spouse by gift is deemed to have been sold at fair market value.
True / False
False
All subsequent income received by a child on property transferred from a parent must be included in the income of the parent.
True / False
False
As a result of a foreclosure, the property is deemed to have been sold for a price equal to the principal amount of the debt owing.
True / False
True
All qualifying losses of other years are included in the special reductions to net income.
True / False
False
Unutilized net capital loss carryovers upon death of an individual can be deducted against any other income in the year of death.
True / False
True
Business losses incurred in the current year can be utilized in the current or future years at the discretion of the taxpayer.
True / False
False
When an individual chooses a corporate structure over a proprietorship, the risk of not being able to use a loss for tax purposes is increased.
True / False
True
Although dividend tax credits and foreign tax credits are in different categories of federal tax credits, they both exist to reduce the effect of double taxation.
True / False
True
The main difference between primary and secondary (such as creditor and employee) shareholder relationships is that shareholder income in secondary relationships is taxed only once.
True / False
True
Although there are several limitations on the utilization of loss carry-overs after a change in control, they do not apply when control is acquired by a related party.
True / False
True
All dividends received from other corporations are included in property income and then taxable income is reduced by a special reduction so that multiple taxation of corporate after-tax income is avoided.
True / False
False
A formula using manufacturing labour and manufacturing sales is used in determining the manufacturing profits subject to the manufacturing and processing deduction.
True / False
False
A formula using wages in a province and sales in a province is used in determining corporate profits subject to the province's income tax.
True / False
True
Since shareholder loans are viewed as capital contributed by the shareholders, it has no effect on bank loans.
True / False
False
A business investment loss could result from a loss on a loan or a loss on share capital of a small business corporation but the timing could be different.
True / False
True
When redeeming corporate shares, the corporation will simply repay the original share capital.
True / False
False
An election may be made by a shareholder to transfer assets to a corporation at tax values and it is designed to avoid tax to the shareholder at the time of the transfer.
True / False
True
When transferring assets to a shareholder during a corporate wind-up, an election can be made to use tax values.
True / False
False
