LOS a: Describe basic global taxation regimes as they relate to taxing dividend income, interest income, realized capital gains, and unrealized capital gains.

Q1. Which of the following has favorable tax treatment under a “flat and heavy” tax regime?

A)   Interest income.

B)   Capital gains.

C)   Dividend income.

Q2. With respect to the “heavy dividend” tax regime and the “heavy interest” tax regime, which if either usually has a progressive ordinary income tax structure?

A)   The heavy interest tax regime only.

B)   Both.

C)   The heavy dividend tax regime only.

Q3. Among global tax regimes, the common progressive tax regime has a favorable tax treatment for:

A)   interest income and dividend income but not capital gain income.

B)   interest income, dividend income, and capital gain income.

C)   dividend income and capital gain income but not interest income.

LOS a: Describe basic global taxation regimes as they relate to taxing dividend income, interest income, realized capital gains, and unrealized capital gains. fficeffice" />

Q1. Which of the following has favorable tax treatment under a “flat and heavy” tax regime?

A)   Interest income.

B)   Capital gains.

C)   Dividend income.

Correct answer is A)

The tax on ordinary income is flat and there is not a favorable tax treatment for dividend income and capital gain income. Interest income has a favorable treatment.

Q2. With respect to the “heavy dividend” tax regime and the “heavy interest” tax regime, which if either usually has a progressive ordinary income tax structure?

A)   The heavy interest tax regime only.

B)   Both.

C)   The heavy dividend tax regime only.

Correct answer is B)

Both have progressive tax structures for ordinary income. They differ on having a less favorable tax structure for the indicated source of income.

Q3. Among global tax regimes, the common progressive tax regime has a favorable tax treatment for:

A)   interest income and dividend income but not capital gain income.

B)   interest income, dividend income, and capital gain income.

C)   dividend income and capital gain income but not interest income.

Correct answer is B)

The common progressive tax regime tends to have a favorable tax treatment for all three.