Chapter 3 Quiz FIN 301

Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were $11,000. How much tax would Tom owe on those gains?

$0

A long-term capital gain is taxed at the same rate as ordinary income.

false*

You would typically not include ____ in your gross income.

life insurance death benefit payments*

When a child qualifies as a dependent on her parent's return, the child cannot take a personal exemption for herself.

true *

One's average tax rate is typically lower than one's marginal tax rate.

true*

Qualified dividends are taxed at the same rates as long-term capital gains.

true*

Social security taxes are paid on earned income but not on investment income.

true*

Tax avoidance is legal, tax evasion is illegal.

true*

The Federal personal income tax is a progressive tax.

true*

The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay.

true*