An Individual Taxpayer Who Is Self-Employed and an Active Investor

question 51

Multiple Choice

An individual taxpayer who is self-employed and an active investor has qualified for foreign tax credits,nonrefundable personal tax credits and general business credits.Because he knows there are differing limitations on the application of these credits,with resulting interrelated aspects,he wants to know the appropriate order for their application.The appropriate order of the application of these three classes of tax credits is as follow:

• A)(1)foreign tax credits; (2)general business credits; (3)nonrefundable personal tax credits.
• B)(1)general business credits; (2)foreign tax credits; (3)nonrefundable personal tax credits.
• C)(1)foreign tax credits; (2)nonrefundable personal tax credits; (3)general business credits.
• D)(1)nonrefundable personal tax credits; (2)foreign tax credits; (3)general business credits.

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Definitions:

Instrumentality

The likelihood that something good (or bad) will come from an increase in effort.

Expectancy Theory

A motivation theory stating that an individual's motivation is related to their expectation of a reward and the attractiveness of that reward.

Manifest Needs Theory

A psychological theory that focuses on observable needs that motivate an individual to perform certain behaviors.

Behavior Modification

The process of changing behavior because of a reward or lack of a reward.