Which of the Following Statements About Ordinary Income and Capital

question 14

Multiple Choice

Which of the following statements about ordinary income and capital gain is false?

• A)Every item of income is ultimately characterized as either ordinary income or capital gain for federal tax purposes.
• B)Most ordinary income items are taxed at the regular individual or corporate tax rates.
• C)Individuals and corporations pay tax on their capital gains at a preferential rate.
• D)None of the above is false.

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Definitions:

State Statute

A written law passed by a legislative body at the state level, governing matters within the state’s powers.

Enumerated Powers

Specific powers granted to the government or its branches through a constitution.

Legislation

Laws or acts passed by the governing body or legislature of a political entity.

Federal Government

The national government of a country, responsible for governing the nation as a whole.