Varson Inc. and Vonsell Inc. are owned by the same family. The family decides to purchase $150,000 of deductible advertising that will benefit the businesses operated by both corporations. Which of the following statements is true?

Question

Quizplus · Accepted Answer

If Varson's marginal tax rate is higher than Vonsell's, it would be more beneficial for Varson to purchase the advertising because the higher tax rate would result in a greater tax savings from the deduction. However, the statement that Vonsell should purchase the advertising in this scenario is incorrect, as is the claim that tax law requires Vonsell to make the purchase or that Varson can claim the deduction regardless of which corporation makes the purchase. None of the provided options accurately describe how tax deductions work in this context.