Chapter 4 Quiz
A long-term capital gain (or loss) occurs when the asset is held for over six months.
False
Which of the following types of subtractions cannot be taken by a taxpayer if he or she itemizes deductions?
Standard deduction
A progressive tax is one that demands a higher percentage of a person's income as income increases.
True
State sales tax is an example of a regressive tax.
True
The key to reducing one's tax liability is to reduce taxable income rather than gross income.
True
To qualify for the earned income credit, taxpayers must have earned income.
True
Qualifying contributions to personal retirement accounts are subtracted as
adjustments to income.
A(n) ____ is an IRS-approved retirement plan sponsored by an employer to which employees may make pretax contributions that lower their tax liability.
defined-contribution retirement plan
Maxine Marshall received $24,000 in disability payments from an insurance policy she paid for. How much of the $24,000 is included in Maxine's gross income?
$0
Long-term capital gains are taxed at a maximum rate of ____ percent.
20