Taxes are applied to the ________.

A) real value of sheltered investment income
B) nominal value of unsheltered investment income
C) nominal value of sheltered investment income
D) real value of unsheltered investment income

Sheltered Investment Income

Investment income that is protected from taxes by being placed in certain types of accounts or investments, like an IRA or a municipal bond.

Nominal Value

The face value of a financial instrument, such as a bond or stock, as stated by the issuer, without accounting for inflation or market value changes.

Unsheltered Investment Income

Income from investments that is not protected from taxes, meaning it is fully exposed to taxation.