Which of the following statements is True?
A) Income character determines the tax year in which the income is taxed.
B) Income character depends on the taxpayer's filing status.
C) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income.
D) A taxpayer selling a capital asset at a gain recognizes ordinary income.

Question

Quizplus · Accepted Answer

Qualified dividends are taxed at a maximum rate of 15% or 20% (depending on the taxpayer's income) and are always taxed at a lower rate than the same amount of ordinary income would be. Income character determines the rate at which income is taxed and it does not depend on filing status. Finally, a taxpayer selling a capital asset at a gain recognizes capital gain not ordinary income.

Which of the Following Statements Is True