Which of the Following Are Legal Methods of Reducing Your

question 26

Multiple Choice

Which of the following are legal methods of reducing your current tax liability?

• A)not reporting taxable income you receive
• B)investing in a tax deferred annuity
• C)shifting income to your children
• D)writing off deductions above the actual amount(s) spent
• E)b and c

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Definitions:

Monthly Income

The total amount of earnings received every month from work, investments, benefits, and other sources.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to normal goods where demand increases with rising income.

Product X

A placeholder term for an unspecified or hypothetical product used in discussions or analyses.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in consumer income.