Question

3. Vocabulary - Taxable income terminology Taxable Income Terminology Match the terms relating to the basic terminology and concepts of personal finance on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term. Term Answer Description A. This is used to offset passive income. Gross income Active income Portfolio income Passive income B. This term includes income from tax shelters. C. This is used to determine tax liability. D. This item is taxed at different rates depending on the holding period. E. Income from savings accounts, stocks, bonds, mutual funds, options, and futures are included in this term. Investment expenses F. This term includes wages, salaries, bonuses/commissions, and interest/dividends/alimony. Real estate or limited partnership expenses Capital gains Sale of a home Taxable income Tax liability G. This term refers to income earned on the job. H. Investment income is offset with this related expense. I. Using taxable income, it is based on tax tables or tax rate schedules. J. During this transaction, you can exclude the first $250,000 $500,000 for married taxpayers) of gain on sale.

Answer 1

Term	Answer	Description
Gross Income	F	This term includes wages, salaries, bonuses/commissions and interest/dividends/alimony
Active Income	G	This term refers to income earned on the job
Portfolio Income	E	Income from savings accounts, stocks, bonds, mutual funds, options and futures are included in this term
Passive Income	B	This term includes income from tax shelters
Investment expense	H	Investment income is offset with this related expense
Real estate or limited partnership expense	A	This is used to offset passive income
Capital gains	D	This item is taxed at different rates depending on the holding period
Sale of a home	J	During this transaction, you can exclude the first 250,000$ of gain on sale
Taxable Income	C	This is used to determine the tax liability
Tax liability	I	Using taxable income, it is based on tax tables or tax rates schedule