Which of the Following Is an Illegal Method of Reducing

question 11

Multiple Choice

Which of the following is an illegal method of reducing your current tax liability?

• A)Not reporting the taxable income you receive
• B)Investing in a tax-deferred annuity
• C)Shifting income to your children
• D)Investing money in municipal bonds
• E)Putting money in a Roth IRA

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Definitions:

Expenses

Money spent or cost incurred in an organization's operations to generate revenue.

Income

Income generated regularly from employment or investment returns.

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the owner's claim on the business.

Statement of Cash Flows

A financial report detailing the cash inflows and outflows for a business over a specific period.