The Information That Follows Applies to the Current Year for Revis

question 8

Multiple Choice

The information that follows applies to the current year for Revis and Patrica, a married couple. • Revis is employed as a shoe salesman; his compensation is $65,000.
• Patrica is employed as an interior designer; her compensation is $90,000.
• Revis and Patrica have total allowable itemized deductions of $15,000.
• Revis and Patrica have two dependent children.
• Revis and Patrica have other economic income as follows: - Interest on U.S. Treasury bonds $1,000. - Interest on French government bonds $750. - Interest on City of Miami, Fla. bonds $1,200. - Patrica won $500 from the state lottery - Revis's wealthy uncle dies and leaves him $10,000. - Patrica sold Revis's baseball card collection for $3,000. Revis bought it for $800. - Patrica sells Revis's fishing boat for $2,000. Revis had purchased the boat for $2,500. Based on the above information, what is Revis and Patrica 's taxable income?

• A) $126,150
• B) $129,950
• C) $128,850
• D) $144,450
• E) $159,450

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Definitions:

Call Options

Financial derivatives that give the buyer the right, but not the obligation, to buy a specified quantity of an asset at a specified price within a certain time period.

Strike Price

The price at which the contract holder can buy or sell the underlying asset in an options contract.

Beta

A parameter that measures the degree of variability or systematic risk of a security or a portfolio in relation to the market at large.

S&P 500 Futures

Financial contracts speculating on the future value of the S&P 500 Index.