A deferral principle specifies that parent companies are not taxed on foreign source income until they actually receive a dividend.

Question

Quizplus · Accepted Answer

This is a correct statement about deferral principles. Parent companies are not taxed on foreign source income until they actually receive a dividend. This is intended to encourage companies to reinvest foreign earnings rather than repatriate them to avoid or minimize taxation.

A Deferral Principle Specifies That Parent Companies Are Not Taxed