William Is Single and Had Salary Income from His Position

question 55

Multiple Choice

William is single and had salary income from his position as Chief Financial Officer of Zippy Bank of $450,000 (the 39.6 tax bracket) .He also had $35,000 in income from the dividends on the stock of his previous employer.How will William's taxable income of $475,000 (after his standard deduction and personal exemption) be taxed?

• A)All $475,000 will be taxed at 39.6%
• B)All $475,000 will be taxed at 43.4% due to the surtax
• C)Only the $450,000 income from his salary will be taxed at 39.6%
• D)His salary income will be taxed at 39.6% and his dividend income at 23.8%

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Definitions:

Equity Multiplier

A financial leverage ratio that measures the portion of a company’s assets that is financed by stockholders' equity.

Total Liabilities

The combined amount of a company's short-term and long-term debts, representing claims against the company's assets by outsiders.

Stockholders' Equity

The value remaining in a company after liabilities are subtracted from assets, representing what is owned by the shareholders.

Debt-to-Equity Ratio

This ratio demonstrates the balance between debt and equity shareholders' equity in financing a company's resources.