When Taxable Income on a Progressive Basis Exceeds Certain Thresholds

question 61

Multiple Choice

When taxable income on a progressive basis exceeds certain thresholds

• A)a higher rate of tax is charged on all income.
• B)tax credits become more important.
• C)deductions reach a maximum allowable amount.
• D)the tax rate is increased on the next dollars of income until a new income level is reached.

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Definitions:

Sole Proprietor

is a business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Corporation

A legal entity that is separate from its owners, providing limited liability, and is able to own property, incur debt, sue and be sued.

General Partner

An owner of a partnership who is responsible for its operations and is liable for its debts without limitation.

Shareholder

An individual or organization that owns at least one share of a company's stock, making them a part owner of that company.