Phuong Has the Following Sources of Investment Income Barring Any Special Elections,how Much of the Investment Income Will

question 13

Multiple Choice

Phuong has the following sources of investment income: $$\begin{array} { | l | r | } \hline \text { Money market account interest } & \$ 2,000 \\\hline \text { Interest on State of New York bond } & 1,000 \\\hline \text { Dividends from domestic stocks } & 3,000 \\\hline \text { Long-term capital gain } & 4,000 \\\hline \text { Short-term capital gain } & 5,000 \\\hline\end{array}$$ Barring any special elections,how much of the investment income will be included in calculating net investment income for purposes of the investment interest expense limitation?

• A)$2,000
• B)$7,000
• C)$5,000
• D)$15,000

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Definitions:

Principal-Agent Problem

An economic conflict where an individual (the agent) has the responsibility to act for the benefit of another party (the principal), but might fail to do so because of differing interests.

Representative Democracy

A form of government where citizens elect officials to represent their interests and make decisions on their behalf in the legislative process.

Private Business

A business entity owned and operated by private individuals, not controlled by the government, and aimed at earning profit.