Which of the Following Statements Is TRUE with Respect to Capital

question 58

Multiple Choice

Which of the following statements is TRUE with respect to capital gains tax?

• A)The name of the tax is derived from the Latin word caput which means "head"-a capital gains tax is the amount that must be paid for each member of a household that earns above a certain amount.
• B)A capital gains tax consists of all of the various amounts that an employer must deduct from an employee's pay cheque.
• C)Only a portion of capital gains are taxed, while all income from sales in the ordinary course of business is taxed.
• D)A company is liable to pay a capital gains tax whenever it sells some of its inventory in the ordinary course of business.
• E)The tax is designed to encourage economically efficient behaviour-it applies only if assets are sold for less than their cost.

---

Definitions:

Principal

The primary party to a transaction, such as a contract or financial instrument, who has the rights and responsibilities directly related to it.

Agent

An individual authorized to act on behalf of another person or entity, often in a business setting.

Liability

A legal obligation or debt that an entity is bound to fulfill towards another party.

Employer's Liability

Legal responsibility of an employer for injuries, illnesses, or damages suffered by employees as a result of their employment.