With regard to debt and equity securities,which of the following statements is TRUE? (Assume the corporations are not in the business of lending money.)

Question

Quizplus · Accepted Answer

A discount on a debt security is fully or partially deductible for tax purposes, depending on the discount rate, is true for non-lending corporations. A premium or discount on an equity issue does not have a tax impact on the issuing corporation because equity is not debt and there is no interest on equity like there is on debt. A premium on a debt security is not taxed but is amortized over the life of the bond.

With Regard to Debt and Equity Securities,which of the Following