What are the major variables that affect the magnitude of the pretax corporate rate of return, Rc? Give examples to illustrate the importance of each variable. Is it possible to rank the importance of each variable?
Answer to relevant QuestionsThe data presented in Table suggest that the corporate form suffered a tax disadvantage relative to the partnership form from 1987 to 1992. List and explain the factors that caused this outcome. Why didn’t more firms ...Following the 1986 Tax Act, the corporate tax rate of 34% was set above the personal tax rate of 28% on ordinary income, and 100% of realized capital gains became taxable at investors’ ordinary rates. What are the required ...Because U. S. corporations are allowed to exclude from taxable income 70% of the dividends they receive from other U. S. corporations, it is sometimes suggested by tax planners that they should invest in dividend paying ...List some tax rule restrictions that prevent organizational form arbitrage. How do they succeed in preventing this arbitrage? How does the concept of implicit taxes apply to investments undertaken in different tax jurisdictions?
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