Which of the Following Is an Example of Tax Evasion

question 140

Multiple Choice

Which of the following is an example of tax evasion?

• A)Beth invests money in tax exempt municipal bonds instead of corporate bonds.
• B)Bryan uses the cafeteria plan offered by his employer to fund pension plan contributions for his retirement.
• C)Bauregard, a very wealthy 87-year-old individual, gives bonds to each of his grandchildren so that the interest income on them would be taxed at a lower tax rate.
• D)Bertha won $500 cash in an amateur mud-wrestling contest but doesn't report it on her tax return.
• E)All of the above are examples of tax evasion.

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Definitions:

Corporate Bond

A type of debt security issued by a corporation to raise funds from investors, who are owed repayment of the loan plus interest.

Futures Contract

A Futures Contract is a legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.

Delivery Date

In finance, specifically with futures contracts, it is the date on which the underlying asset must be delivered or received under the terms of the contract.