11. The tax system Aa Aa Understanding taxes From a corporation's point of view, does the tax treatment of dividends and interest paid favor the use of debt financing or equity financing? Equity financing O Debt financing You bought 1,000 shares of Tund Corp. stock for $75.00 per share and sold it for $77.25 per share within the same year. How will your gain or loss be treated when you file your taxes? O As a capital gain taxed at the current ordinary-income tax rate O As a capital gain taxed at the long-term tax rate O As a capital loss taxed at the long-term tax rate O As a capital loss deducted from taxable income in the year that the loss is realized Suppose you want to invest $10,000. You have two options: (1) Invest in California municipal bonds with an expected rate of return of 13.00%, or (2) invest in J and K Corp.'s bonds with an expected rate of return of 17.55% Assume that your decision is based on a tax perspective. If everything else is the same for both bonds, at what tax rate would you be indifferent between these two bonds? 25.93% O 22.04% 23.34% 32.4190 If a taxpayer is liable to pay $8,950 under AMT law but $7,500 according to the regular tax system, the taxpayer will need to pay taxes according to the Suppose a firm in the 40% federal-plus-state tax bracket needs to pay $1 in dividends to its shareholders. What is the pretax income it should have to pay this dividend? $1.67 $1.00