Janet and Her Husband, Bob, Are Facing a Totally New

question 101

Multiple Choice

Janet and her husband, Bob, are facing a totally new income tax situation this year. She is a corporate accountant and Bob is an engineer. Their gross salaries total $89,000. Janet and Bob graduated from four-year universities six years ago and are still paying off large college loans. She is attending school part-time now to prepare for the CPA exam. The Emmersons incurred considerable expenses in the process of adopting an infant this year, and also have the ongoing expense of daycare. In January of last year they closed on their new home. Although trained as an accountant, Janet's work has not involved income tax preparation. Help them consider the following questions.
-With a growing family, Janet and Bob know they should start investing more to provide for a secure future. Which of the following issues should they consider as they plan?

• A) Interest paid on money borrowed to invest is an itemized deduction
• B) Contributions to tax-deferred retirement accounts avoid taxes in the current year and grow tax-free until the time of withdrawal
• C) Qualified dividends and capital gains are taxed at a lower rate than ordinary income
• D) Municipal bond earnings are exempt from federal income tax
• E) all of the above

---

Definitions:

Technological

Relating to or involving technology, especially in regard to its development, use, or impact in society and business.

Political

Relating to the government, public affairs, or the administration of public policy.

Trade War

A situation in which countries try to damage each other’s trade, typically by the imposition of tariff and quota restrictions.

Tariffs

Taxes imposed by a government on goods and services imported from other countries.