Which of the Following Is Incorrect with Regard to Taxes

question 56

Multiple Choice

Which of the following is incorrect with regard to taxes imposed on stock transactions?

• A)Stock transactions are subject to dividend and capital gains tax at the federal level and may be subject to state income tax as well.
• B)Stocks have to be held for at least one year to qualify for the long-term capital gains tax.
• C)The maximum federal tax on dividends and long-term capital gains is 14 percent.
• D)Higher tax rates are imposed on the dividends and capital gains of individuals in high tax brackets.

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Definitions:

Income From Operations

Earnings generated from a company's regular, core business operations, excluding non-operational income and expenses.

Investment Turnover

A measure of the trading activity in an investment portfolio, calculated by dividing the total sales or purchases (whichever is less) of securities by the average value of the portfolio's assets.

Income From Operations

The profit generated from a business's core activities, excluding revenues and expenses from non-operational activities.

Invested Assets

Invested assets refer to the total of all investments held by an individual or institution, including stocks, bonds, real estate, and other financial assets.