Which of the following does not represent a tax implication in the bond refunding decision?

Question

Quizplus · Accepted Answer

All of the options listed have tax implications. The call premium is subject to tax as it is a payment made to the bondholders to compensate for the early redemption of their bonds. The cost savings in lower interest rates can result in a reduction in interest expense and thus a reduction in taxable income. The underwriting costs of a new issue are tax-deductible expenses that reduce taxable income. Therefore, all of these options have tax implications.

Which of the Following Does Not Represent a Tax Implication