Which of the Following Types of Income Is Not Subject

question 7

Multiple Choice

Which of the following types of income is not subject to the "kiddie tax"?

• A)Interest income
• B)Dividend income
• C)Salary income
• D)Capital gains on stock sales
• E)All of these are subject to the "kiddie tax"

---

Definitions:

Residual Income

Residual income is the profit earned after subtracting all required costs of capital from the operating profit.

Minimum Required Rate

The least acceptable rate of return on an investment, often used in capital budgeting to assess potential projects.

Operating Assets

Assets used by a business in its daily operations to generate revenue, excluding investments and non-essential properties.

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that exceeds variable costs, indicating how sales affect profitability.