A tax shield is equal to the reduction in:
A) tax liability resulting from a deductible expense.
B) taxable income resulting from a deductible expense.
C) cash flow from an expense.
D) net income.

Question

Quizplus · Accepted Answer

A tax shield is the reduction in tax liability that results from a deductible expense. Deductible expenses lower the amount of taxable income, which in turn reduces the amount of taxes owed. Therefore, option A is the correct choice.

A Tax Shield Is Equal to the Reduction In