Which of the following statements regarding "taxation of dividends and capital gains under current tax law" is incorrect (assuming that the marginal tax rate for a large corporation is 35%)?
A) For-profit corporations have a tax reason to prefer dividends.
B) Corporations pay corporate income tax on only 30% of any dividends received.
C) The effective tax rate on dividends received by large corporations is 35% of the marginal corporate tax rate.
D) Corporations have to pay a 35% tax on the full amount of any realized capital gain.

Question

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The Answer of Which of the following statements regarding "taxation of dividends and capital gains under current tax law" is incorrect (assuming that the marginal tax rate for a large corporation is 35%)?
A) For-profit corporations have a tax reason to prefer dividends.
B) Corporations pay corporate income tax on only 30% of any dividends received.
C) The effective tax rate on dividends received by large corporations is 35% of the marginal corporate tax rate.
D) Corporations have to pay a 35% tax on the full amount of any realized capital gain.

Which of the Following Statements Regarding "Taxation of Dividends and Capital