All of the following reflect the implications of income taxes for financial managers EXCEPT:

Question

Quizplus · Accepted Answer

This statement is incorrect as interest payments on debt made by the firm are tax deductible, which reduces the taxable income of the firm.

The given options B, C, and D reflect the implications of income taxes for financial managers. Preferred stock and common stock dividends are not tax deductible, which increases the taxable income. Dividends are taxed on both the corporate level and the stockholders' tax return, which reduces the after-tax income of the stockholders. Depreciation provides a tax deduction for the corporation, which also reduces the taxable income.

All of the Following Reflect the Implications of Income Taxes