Which of the following decreases the benefits of accelerating deductions?
A)Decreasing tax rates
B)Smaller after-tax rate of return
C)Larger after-tax rate of return
D)Larger magnitude of transactions
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Accelerating deductions reduces taxable income and therefore reduces the amount of taxes owed. However, if the after-tax rate of return on investments is small, then the benefit of reducing taxes through accelerating deductions is also small as there is less to gain from investing the savings from taxes.

Which of the Following Decreases the Benefits of Accelerating Deductions