What Would Be the Difference in the Tax Consequences of an $18,000

question 95

Multiple Choice

What would be the difference in the tax consequences of an $18,000 withdrawal from a Roth IRA versus a traditional IRA if $15,000 represents long-term capital gains,$2,000 is short-term capital gains,and $1,000 is interest? Assume a tax rate of 30% and a capital gains tax rate of 10%.

• A) $5,200 more in taxes with a traditional IRA
• B) $4,800 more in taxes with a traditional IRA
• C) $5,400 more in taxes with a traditional IRA
• D) $5,400 more in taxes with a Roth IRA

---

Definitions:

Variable Expense Ratio

A ratio computed by dividing variable expenses by sales.

Break-even Analysis

A calculation to determine the sales volume at which total revenues equal total costs, indicating no profit or loss.

Contribution Margin Ratios

The ratio of contribution margin (sales minus variable costs) to sales revenue, indicating the percentage of sales revenue that exceeds variable costs.

Break-even Point

The production level at which total revenues equal total expenses, resulting in no profit or loss.