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?
A) If Varson's marginal tax rate is higher than Vonsell's marginal tax rate,Vonsell should purchase the advertising to minimize after-tax cost.
B) If Varson's marginal tax rate is higher than Vonsell's marginal tax rate,the tax law requires Vonsell to purchase the advertising.
C) If Varson's marginal tax rate is higher than Vonsell's marginal tax rate,Varson can claim a $150,000 deduction on its tax return regardless of which corporation purchases the advertising.
D) None of the above is true.
Correct Answer:
Verified
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