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Which of the following is NOT a component of taxable income?

Practice Questions

Q1
Which of the following is NOT a component of taxable income?
  1. Salary
  2. Dividends
  3. Gifts from friends
  4. Interest income

Questions & Step-by-Step Solutions

Which of the following is NOT a component of taxable income?
  • Step 1: Understand what taxable income is. Taxable income is the amount of income that is subject to taxes.
  • Step 2: Identify common components of taxable income. These usually include wages, salaries, bonuses, and interest income.
  • Step 3: Consider what is NOT included in taxable income. Gifts from friends are generally not considered taxable income.
  • Step 4: Conclude that since gifts from friends are not earned income, they do not count as a component of taxable income.
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