Which of the following statements regarding capital gain income and dividend income is true?

Question

Quizplus · Accepted Answer

Income from capital gains is typically taxed at a lower rate than dividend income, enabling investors to minimize their personal tax liability more effectively. A tax clientele refers to investors who are drawn to certain types of investments because of their tax implications, such as the preference for dividend-paying stocks among investors who are in a higher tax bracket. However, this does not minimize the tax penalty on dividend income, as it is generally taxed at a higher rate than capital gains income. Capital losses can be used to offset both types of income, but this does not necessarily result in lower personal income taxes on investment income. Capital gains are taxed at a lower rate than ordinary income, while dividend income is subject to higher tax rates. Therefore, income in the form of capital gains enables an investor to minimize his personal tax liability more than dividend income does.

Which of the Following Statements Regarding Capital Gain Income and Dividend