One of the Most Important Distinctions in International Taxation Is

One of the most important distinctions in international taxation is between active and passive income. Which of the following statements about these types of income is incorrect?

A) Taxation of passive income is generally accomplished by applying a withholding tax rate to the gross amount of income and then only when it is transferred out of the country.
B) Taxation of active income is generally accomplished by applying a tax rate to the net amount of income (revenues minus expenses) and then only when the income is transferred out of the country.
C) The tax rate applicable to active income is often higher than the withholding rate on passive income.
D) Passive investment income consists of such things as dividends, interest, royalty income from securities, and the licensing of intangible assets.
E) Statements c and d are correct.