Identify the Rule That Determines Whether a Taxpayer Must Include

question 74

Multiple Choice

Identify the rule that determines whether a taxpayer must include in income a refund of an amount deducted in a previous year:

• A) Tax refund rule
• B) Constructive receipt
• C) Return of capital principle
• D) Tax benefit rule
• E) None of these

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Definitions:

Production Possibilities Curve

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology.

Unemployment Rate

The fraction of the labor market actively in pursuit of work but is currently jobless.

Opportunity Cost

The expense associated with giving up the second-best choice in favor of opting for the preferred alternative in any decision-making process.

Production Possibilities Frontier

A graph that represents the highest possible production levels for two or more products, based on available inputs such as resources and labor.