Ch4 Connect

Question 1

US tax laws are based on the all-inclusive concept that:

Answer 1

gross income includes all realized income from whatever source derived

Question 2

tax-exempt character:

Answer 2

income realized during the year that is excluded from gross income and never taxed

Question 3

tax-deferred character:

Answer 3

income realized during the year that is not included in gross income until a later year

Question 4

ordinary character:

Answer 4

income included in gross income in the current year and taxed at the ordinary rates per tax schedules

Question 5

capital character:

Answer 5

gains or losses on investment or personal use assets that may be taxed at favorable rates

Question 6

qualified dividends

Answer 6

dividends from corporations that meet certain requirements to be taxed at a favorable rate