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Economic incidence of tax; prepayment of interest

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True and False

1. The person who pays a tax directly to the government bears the economic incidence of the tax.

2. A cash basis taxpayer must account for any prepayment of interest expense under the accrual method.

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Solution Summary

In two short paragraphs, each question is fully explained together with a true false answer.

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1. The person who pays a tax directly to the government bears the economic incidence of the tax.

Not necessarily true. Example is that you buy a new shirt at the store and pay the sales tax as part of the total purchase ...

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