Which of the Following Statements About Ordinary Income and Capital

question 86

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)Statements B.and C.are true.

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Definitions:

Efficient Level

Describes a state where resources are allocated in the most effective manner, maximizing output and outcomes.

Marginal Social Benefit

The incremental advantage to the community from the consumption or production of an additional unit of a product or service.

Pollution

is the introduction of contaminants into the natural environment that cause adverse changes, affecting air, water, and land quality detrimentally.

Positive Externality

A benefit that affects a party who did not choose to incur that benefit.