An Acceptable Method of Reducing Your Taxable Income Would Be

question 40

Multiple Choice

An acceptable method of reducing your taxable income would be

• A)selling bonds to purchase stocks to change income from interest to dividends.
• B)deducting gasoline expenses incurred while driving back and forth to your office from home.
• C)deducting the cost of investment advice you never received.
• D)deducting life insurance premiums as an investment expense.

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Definitions:

Operating Assets

Assets used by a business in its daily operations to generate revenue, excluding investments and non-essential properties.

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that exceeds variable costs, indicating how sales affect profitability.

Fixed Expenses

A rephrased definition could focus on the costs that do not vary with the level of production or business activity, which may include long-term contractual obligations and basic operational costs.

Minimum Required Rate

Refers to the lowest acceptable rate of return on investment that a business or individual expects to achieve.