Which of the Following Statements Is True About Education Credits

question 123

Multiple Choice

Which of the following statements is true about education credits?

• A)A taxpayer cannot claim an American opportunity tax credit or lifetime learning credit in the same year he/she takes a tax-free distribution from a Coverdell Education Savings Account.
• B)A taxpayer may be eligible to claim the education credits regardless of their AGI amount.
• C)The lifetime learning credit may be limited by AGI levels and may completely phase out when modified AGI exceeds a certain amount the amount depending on the tax year).
• D)A taxpayer can use the same qualifying expenses for both the American opportunity tax and lifetime learning credits.

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Definitions:

Defective Units

Products that fail to meet quality standards or specifications and are often unsellable or subject to returns and repairs.

Salvage Company

A business specialized in saving, recovering, and selling the usable parts of damaged, inoperative, or discarded goods.

Incremental Cost

The additional cost incurred to produce one more unit of a product or service.

Annual Revenues

The total amount of sales and other income generated by a business within a fiscal year.