Which of the Following Statements About Ordinary Income and Capital

question 59

Multiple Choice

Which of the following statements about ordinary income and capital gain is true?

• A)Income characterized as capital gain can have no additional tax characteristics.
• B)Individuals pay tax on their capital gains at a preferential rate.
• C)Corporations pay tax on both ordinary income and capital gain at their regular rate.
• D)Individuals pay tax on their capital gains at a preferential rate and corporations pay tax on both ordinary income and capital gain at their regular rate.

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Definitions:

Product Liability Lawsuit

Legal action taken against a manufacturer or seller for producing or selling a defective product that causes injury or harm to the consumer.

Vacation Pay

A benefit provided by employers that pays employees while they are on holiday.

Legal Counsel

Professional legal advisory services provided by a lawyer or law firm to individuals, businesses, or other entities.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and ability to fund day-to-day operations.