In Preparing His 2010 Federal Income Tax Return,Sam,who Is Not

question 106

Multiple Choice

In preparing his 2010 Federal income tax return,Sam,who is not married,incorrectly claimed alimony payments of $12,000 as an itemized deduction (rather than as a deduction for AGI) .Sam's AGI is $60,000 and itemized deductions (which consist of the alimony,property taxes,and mortgage interest) are $20,000.Which of the following statements is correct?

• A)The error will result in taxable income being overstated.
• B)The error will result in taxable income being understated.
• C)The error could result in either taxable income being overstated or understated.
• D)The error will have no effect on taxable income.
• E)None of the above.

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Definitions:

Elasticity Of Supply

A measure of how much the quantity supplied of a good changes in response to a change in its price.

Tax Revenue

It's the income that is collected by governments through taxation.

Excise Tax

A tax on specific goods, such as alcohol and tobacco, typically imposed at the point of manufacture or sale.

Total Tax Revenue

The total amount of money collected by the government from taxes, which can come from various sources like income taxes, sales taxes, and corporate taxes.