Final answer:
Bonds are a popular form of debt funding due to taxation benefits, with interest payments often being tax-deductible for borrowers, and come in various forms including corporate, municipal, state, and Treasury bonds.
Step-by-step explanation:
The form of debt that is a popular funding option due to taxation benefits for borrowers is bonds. Since interest payments on bonds can often be deducted for tax purposes, many borrowers find them advantageous for financing activities. Bonds come in various forms, including corporate bonds issued by firms and municipal and state bonds issued by cities and states, respectively. Additionally, the federal government issues Treasury bonds through the U.S. Department of the Treasury. The taxation aspect makes them a favorable choice for raising capital while benefiting from potential tax savings.