Which of the following would typically be included in taxable income?

Study for the IMC Taxation Exam. Prepare with flashcards and multiple choice questions. Each question includes hints and explanations. Ace your test with confidence!

Salaries and interest income are typically included in taxable income because they represent earnings and financial gains that are realized by the taxpayer. Salaries are compensation for services rendered and are subject to income tax, reflecting the exchange of work for money. Interest income arises from lending money or holding interest-bearing accounts and investments, such as savings accounts, bonds, or certificates of deposit. This type of income is classified as taxable because it reflects a gain that increases the taxpayer's financial resources.

In contrast, cash gifts from family are generally not subject to income tax for the recipient, as gifts are not considered income. Savings bonds, while they can yield taxable interest, may not be included in income until they are redeemed or sold, and life insurance proceeds are typically not included in taxable income due to the nature of these payments being intended as a financial safety net for beneficiaries.

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