Which of the Following Statements Concerning a Comparison Between Employees

question 110

Multiple Choice

Which of the following statements concerning a comparison between employees and independent contractors is most accurate?

• A) Employees and independent contractors deduct business expenses as miscellaneous itemized deductions.
• B) While employees are typically eligible for nontaxable fringe benefits from employers, independent contractors are not.
• C) Employers typically withhold federal income taxes from compensation paid to employees and to independent contractors.
• D) Employers are required to withhold either FICA or self-employment taxes from compensation paid to employees and compensation paid to independent contractors.

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Definitions:

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Contango

A situation in futures trading where the future price of a commodity is higher than the spot price, often indicating expectations of rising prices.

Natural Hedgers

Entities or individuals who inherently have an opposite risk exposure compared to their needed market position, allowing them to hedge their risks without having to use derivative products.

Backwardation

Backwardation is a market condition in which futures prices are lower in the distant delivery months than in the near delivery months, often indicating a shortage of the commodity in the spot market.