Which of the Following Statements Relating to the Standard Deduction

question 88

Multiple Choice

Which of the following statements relating to the standard deduction, if any, is correct?

• A)If a taxpayer dies during the year, his or her standard deduction must be prorated.
• B)If a taxpayer is claimed as a dependent of another, his or her additional standard deduction is allowed in full (i.e., no adjustment is necessary).
• C)If spouses file separate returns, both must claim the standard deduction (rather than itemize their deductions from AGI).
• D)If a taxpayer is claimed as a dependent of another, no basic standard deduction is allowed.
• E)None of these.

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Definitions:

Settlement Date

The day on which a trade or transaction must be finalized, with the transfer of the asset and payment completed between buyer and seller.

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified price on a future date, used mainly for hedging or speculation.

Fair Value Hedge

A hedge of the exposure to changes in fair value of an asset or liability or an identified portion of an asset or liability that is attributable to a particular risk.

Cash Flow Hedge

A form of hedge that aims to manage exposure to fluctuations in cash flows related to a particular risk, such as interest rates or foreign exchange rates.