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:

Diversification

A strategy used in investing or business to spread risks by allocating resources across different assets, products, or markets.

Expected Gain

The anticipated benefit or profit from an investment or action.

Diversification

A strategy of investing in a variety of assets to reduce overall risk.

Expected Gain

The anticipated benefit or profit that arises from a specific action or investment.