Which of the Following Statements About Ordinary Income and Capital

question 14

Multiple Choice

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

• A)Every item of income is ultimately characterized as either ordinary income or capital gain for federal tax purposes.
• B)Most ordinary income items are taxed at the regular individual or corporate tax rates.
• C)Individuals and corporations pay tax on their capital gains at a preferential rate.
• D)None of the above is false.

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Definitions:

Total Fixed Costs

The total of all expenses that stay the same no matter the amount of production or output.

Average Total Costs

The total cost of production (fixed and variable costs combined) divided by the number of units produced; it shows the cost per unit of output.

Variable Costs

Costs that change in proportion to the level of output in the production process.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short run.