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# If an investment has produced no profit, tax relief predicated on havi

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If an investment has produced no profit, tax relief predicated on havi  [#permalink]

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14 Aug 2019, 03:02
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Difficulty:

75% (hard)

Question Stats:

49% (01:57) correct 51% (02:23) wrong based on 74 sessions

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If an investment has produced no profit, tax relief predicated on having made the investment is no help; any corporate manager who fears that a new asset will not make money is scarcely comforted by promises of reductions in taxes the corporation will not owe.

Which of the following is the most reliable inference to draw from the passage above?

(A) An effective way to discourage unprofitable corporate investment is to predicate tax relief on the making of profitable investments.
(B) Corporate managers are likely to ignore tax considerations in deciding to invest in assets they believe will be profitable.
(C) The promise of tax benefits for making new investments will not in and of itself stimulate new investment.
(D) The less importance a corporate manager attaches to tax considerations, the more likely it is that the manager will accurately predict the profitability of an investment.
(E) The critical factor in a corporate investment decision is likely to be a corporate manager's emotional response to perceived business conditions.

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Re: If an investment has produced no profit, tax relief predicated on havi  [#permalink]

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18 Aug 2019, 23:22
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If an investment has produced no profit, tax relief predicated on havi  [#permalink]

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19 Aug 2019, 05:37
If an investment has produced no profit, tax relief predicated on having made the investment is no help; any corporate manager who fears that a new asset will not make money is scarcely comforted by promises of reductions in taxes the corporation will not owe.

Premise: no profit in investment --> tax relief no help
Conclusion: cor.manag that has bad non-profit invest ---> doesn't care about tax reliefs

(A) An effective way to discourage unprofitable corporate investment is to predicate tax relief on the making of profitable investments.

Applying tax relief to profitable investmen doesn't have nothing to do with discouraging unprofitable investments

(B) Corporate managers are likely to ignore tax considerations in deciding to invest in assets they believe will be profitable.

Passage talks about considerations of tax relief in non-profitable investments. We don't know if investors would ignore tax considerations in profitable investment. If we have to assume it, it would actually be the oposite because tax considerations in profitable investments would imply more or less profits for the investor. Therefore, the investor will care about it

(C) The promise of tax benefits for making new investments will not in and of itself stimulate new investment.

This options says that tax reliefs considerations have nothing to do with stimulation of investment. This sounds good so far

(D) The less importance a corporate manager attaches to tax considerations, the more likely it is that the manager will accurately predict the profitability of an investment.

Tax reliefs have nothing to do with nvestment predictions

(E) The critical factor in a corporate investment decision is likely to be a corporate manager's emotional response to perceived business conditions.

Emotional responses have nothing to do with the pasaage

OPTION C is the only one that can be inferred from the passage

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If an investment has produced no profit, tax relief predicated on havi   [#permalink] 19 Aug 2019, 05:37
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