Exemption Amounts and Itemized Deductions Are Two Types of Reductions

question 41

Multiple Choice

Exemption amounts and itemized deductions are two types of reductions used to calculate taxable income.Which of the following are characteristics of these types of deductions?
I.Taxpayers deduct the larger of itemized deductions or the standard deduction.
II.Exemption amounts are dependent on amounts of expenditures for dependents.
III.Deductions for adjusted gross income are limited to those incurred in a trade or business,incurred in the earning of income,and certain specifically allowed personal expenses of individuals.
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• A)Only statement III is correct.
• B)Statements I and II are correct.
• C)Statements I and III are correct.
• D)Statements II and III are correct.
• E)Statements I,II,and III are correct.

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Definitions:

Historical Returns

Past performance outcomes of an investment over a specified period of time.

Adjusted Beta

A measure of a security's volatility in relation to the market, adjusted based on its historical performance.

Mean-Variance Efficient

A portfolio that offers the highest expected return for a defined level of risk or the lowest risk for a given level of expected return, according to modern portfolio theory.

Sensitivity Coefficients

Numeric values representing the sensitivity of a dependent variable, or a portfolio's performance, to changes in an independent variable or specific market factor.