The tax character of an item of income can change when Congress amends the tax law.

Question

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The tax character of an item of income can change when Congress amends the tax law. For example, an income stream that was previously taxed as capital gains may be reclassified as ordinary income if the tax law changes. This demonstrates the dynamic nature of tax laws and the need for taxpayers to stay informed and adapt their tax strategies accordingly.

The Tax Character of an Item of Income Can Change