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In: Accounting

Capital assets are defined in the Code as any property held by the taxpayer other than...

Capital assets are defined in the Code as any property held by the taxpayer other than certain items including:

a.Inventory, accounts receivable, and depreciable property used in a business.

b.Accounts payable and depreciable property or real estate used in a business.

c.Inventory, accounts payable, and depreciable property used in a business.

d.Inventory, accounts receivable, and intangible assets used in a business.

e.Accounts receivable, long-term investments, and depreciable property used in a business.

The rates in the Tax Rate Schedules are often referred to as:

a.Statutory.

b.Computational.

c.Marginal.

d.Regulatory.

e.Average.

A net capital gain occurs if the:

a.Net long-term capital gain exceeds the net short-term capital loss.

b.Net long-term capital gain exceeds the net long-term capital loss.

c.Net short-term capital gain exceeds the net short-term capital loss.

d.Net short-term capital loss exceeds the net long-term capital gain.

e.Net long-term capital loss exceeds the net short-term capital loss.

Expert Solution

Q.1 Following Items are not capital assets -

a. Inventory, accounts receivable, and depreciable property used in a business.

Explanation -

Definition of Capital Assets - Capital asset includes - Assets held for personal use, Personal Stocks,

Assets which are not consider as capital assets are - Business Assets, Business Accounts receivables, Business Inventory, Business use depreciable Assets.

Q.2 Rates in the Tax rates schedule -

c. Marginal.

Explanation -

Rates as per the tax brackets are incremental in nature. It increases if the income of the individual increases with the single amount of dollar. Hence those rates are called marginal rates.

Q.3 A net capital gain occurs if the -

a. Net long-term capital gain exceeds the net short-term capital loss.

Explanation -

Net Long term capital Gain means the loss and gain arising out of long term capital assets, and Net capital loss means loss and gain arising out from short term capital assets.

Net effect of those gains and loss would result in net capital gain.

ekkarill92 answered 2 years ago

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