Chart 1. Marginal and average corporate tax rates, 1983
Taxable income (Source: Sharp. Investments. Prentice Hall (1978))
Exercise 4
Answer the questions:
1. What are the tax advantages of a single proprietorship/partnership versus a corporation?
2. In what senses is corporate income liable to double taxation?
3. Why is the marginal rate of taxation most relevant for investment decisions?
4. In the US, how long does it take to depreciate a photocopier, computer, etc.?
5. Why do most companies nowadays operate the LIFO inventory method?
Exercise 5
Look at the following sentences taken from the Reading passage:
'The larger a corporation's taxable income, the closer its average tax rate comes to the higher marginal rate
' The sooner the cost can be written off, the greater the benefit to the company.'
Now express comparative relations using the words : lower, greater, higher, more, less, shorter, longer. Say at least two sentences in each case.
………..the price, ……….the profit.
………. we wait, ………..the ROI (return on investment).
………. the target market, ………. profitable it is.
………. the demand, ………… the trade deficit.
Exercise 6
Look at the following sentences taken from the Reading passage:
'Although many more firms are organized as partnerships . . ’
‘ 'There arc usually only a few basic rates . . ’
Now complete the sentences with one of the following:
much many few little fewer less
1. ____ people realize how ____ tax they could avoid paying if they studied the tax laws.
2. ____ people believe they pay too ____ tax.
3. There is too ____ time and too ____ problems to talk about irrelevant issues.
4. There isn’t ____ evidence to support these figures.
5. You'll pay much ____ tax in the Cayman Islands than in most other places.
6. Very ____ tax authorities have clear plans for corporation tax in the future.
7. There are many ____ opportunities to avoid tax nowadays.
8. ____ companies operate the FIFO method nowadays.
Exercise 7
Complete the list below
Verb Noun Adjective
to govern …………….. ……………….
to provide ……………. ………………
………… a decision ………………
…………. …………… considerable
to apply …………… ……………….
……… depreciation ………………
to deduct ……………. ……………….
to assess …………… ……………….
to sacrifice …………… ………………
to profit …………… ………………
Exercise 8
Match the words on the left with their best synonym on the right:
1. accountant a. Example
2. via b. in the end
3. virtually c. make better
4. instance d. to consider
5. eventually e. mainly, chiefly
6. charge off f. Book-keeper
7. vexing g. Example
8. rapidly h. Through
9. assume i. in fact
10. actual j to write off
11. suggest k. Influence
12. improve l. To suppose
13. accountant m. to make better
14. impact n. real
Exercise 9
Guess the meaning of the word by its definition.
All things owned by a person or business and having some money value, especially if they can be used to pay debts, produce goods, or in some way help the business to make profit.
A business owned by two or more partners.
An official piece of writing, e.g. a bond or a piece of stock, giving the owner the right to certain property.
When compared to others of the same kind
Directly connected with the subject.
To remove from the records or accounts.
All the goods in one place.
A combination of thing or people of different types.
A person whose job is to control and examine the money accounts of businesses or people.
The US federal organization that assesses and collects all personal and business federal taxes.
Any document that shows the state of the finances or financial position of a person or organization, usually listing assets and liabilities as in a balance sheet, or giving an account of profit and loss.
The percentage rate of income tax paid by a taxpayer on that part of his income that is taxed the most.
A gradual loss in the value of something, such as a vehicle, a machine or any asset that wears out with use and age.
To find the size, length, amount, degree, etc., of something in standard units.