Which of the Following Statements Describing Individual Tax Deductions Is

question 15

Multiple Choice

Which of the following statements describing individual tax deductions is false?

• A) In a year in which an individual takes the standard deduction, any itemized deductions yield no tax benefit.
• B) The majority of individual taxpayers itemize rather than taking the standard deduction.
• C) Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction.
• D) Individuals who pay self-employment tax can deduct one half of the tax as an above-the-line deduction.

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Definitions:

Exercising Option

The act of implementing the right to buy or sell an underlying asset at a predetermined price before the option expires.

Option Contract

A financial derivative contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price within a specified time frame.

Underlying Asset

The financial asset upon which a derivative's price is based, such as stocks, bonds, commodities, or currencies.

Conversion Price

The predetermined price at which convertible securities can be exchanged for another form, typically common stock.