Which of the Following Statements Regarding a Coverdell Education Savings

question 19

Multiple Choice

Which of the following statements regarding a Coverdell Education Savings Account CESA) is correct?

• A)Distributions used to pay qualified higher education expenses of the beneficiary are tax-free.
• B)A person can contribute to a CESA only if the beneficiary is related by blood or marriage.
• C)Contributions to a CESA are tax deductible and the distributions are tax-free if used for their intended purpose).
• D)Taxpayers who file a joint tax return can contribute to a CESA only if their AGI is less than $150,000.

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Definitions:

Induced Consumption

The portion of consumer spending that increases or decreases as disposable income increases or decreases, respectively.

Disposable Income

The collective fiscal pool available to households for spending and saving post income tax engagements.

Induced Consumption

The concept in Keynesian economics referring to the portion of consumer spending that increases with income. Higher income levels tend to lead to higher consumer spending.

Disposable Income

The total financial resources available to people or households for savings and expenses after subtracting income tax.