Interest versus Dividend Income.Distinguish between interest income and dividend income. Does their treatment differ for tax purposes?

InterestInterest

income comes from:(Select the best answer below.)

A.

stock ownershipstockownership.

B.

the difference between the market rate and the account rate.

C.

interest on investments such as bonds and CDsinterestoninvestmentssuchasbondsandCDs.

D.

the expected value of the asset.

Which of the following is true regarding the differing treatment of dividend and interest income for tax purposes?(Select the best answer below.)

A.

Both interest income and dividend income are included in gross income to determine taxable income, but dividend income is taxed at lower rates.

B.

Neither interest income nor dividend income is included in gross income to determine taxable income.

C.

Interest income is included in gross income to determine taxable income but dividend income is not.

D.

Interest income is not included in gross income to determine taxable income but dividend income is.