Final answer:
The portion of realized gain or loss considered in computing taxable income is known as d) Taxable gain. It is a component of adjusted gross income after subtracting deductions and exemptions, reflecting the progressive nature of the tax system.
Step-by-step explanation:
The portion of realized gain or loss that is considered in computing taxable income is known as d) Taxable gain. Taxable income can be defined as adjusted gross income minus deductions and exemptions. As an individual's income increases, the amount of tax assessed also increases. This is due to the nature of the progressive tax system, where the rate of tax applied grows steeper at higher levels of income, indicating a higher fraction of additional income being taxed. Key terms such as earned income tax credit (EITC), effective income tax, estate tax, and income inequality play crucial roles in understanding how taxable income is calculated and the associated implications on a household's finances. The EITC specifically helps to reduce the tax burden on the working poor.