If an Asset Qualifies for the Investment Tax Credit (ITC)

question 25

True/False

If an asset qualifies for the investment tax credit (ITC), 10% of the asset's purchase cost can bededucted from federal tax payable.

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Definitions:

Keogh Deduction

A Keogh Deduction refers to tax-deferred pension plan contributions for self-employed individuals and unincorporated businesses, allowing for higher contribution limits compared to other retirement accounts.

Self-Employment Tax

A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves.

Highly Compensated Employees

Employees who receive compensation from the business exceeding a specific threshold set by the IRS, subject to additional tax regulation.

Tax-Deferred Plans

Investment accounts that allow taxes on the principal and/or earnings to be paid at a future date instead of the year the investment earns income.