Which of the following statements isFALSE?

A.

Unlike with capitalstructure, taxes are not an important market imperfection that influence afirm's decision to pay dividends or repurchase shares.

B.

If dividends are taxed at a higher rate than capitalgains, which has been true until the most recent change to the taxcode, shareholders will prefer share repurchases to dividends.

C.

Shareholders typically must pay taxes on the dividends they receive. They must also pay capital gains taxes when they sell their shares.

D.

Because longminus

term investors can defer the capital gains tax until theysell, there is still a tax advantage for share repurchases over dividends.