In: Accounting
QUESTION 15
Martell incurred a net long-term capital loss of $4,000 and no short-term capital gains or losses. Assuming his other income is $40,000, he will be able to deduct what amount?
a. |
$2,400 |
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b. |
$4,000 |
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c. |
$2,000 |
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d. |
$3,000 |
QUESTION 16
If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion), makes the appropriate election, and the amount reinvested in replacement property is less than the amount realized, realized gain is:
a. |
Recognized to the extent of realized gain. |
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b. |
Permanently not subject to taxation. |
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c. |
Recognized to the extent of the deficiency (amount realized not reinvested) |
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d. |
Recognized to the extent of the amount reinvested in excess of the adjusted basis. |
QUESTION 15 | |||
Martell incurred a net long-term capital loss of $4,000 and no short-term capital gains or losses. Assuming his other income is $40,000, he will be able to deduct what amount? | |||
a. | $2,400 | ||
b. | $4,000 | ||
c. | $2,000 | ||
d. | $3,000 | Correct | if Martell don't have capital gains to offset the capital loss, he can use a capital loss as an offset to ordinary income, up to $3,000 per year and remaining 1000 will be carried forward to future tax years. |
QUESTION 16 | |||
If the taxpayer qualifies under § 1033 (nonrecognition of gain from an involuntary conversion), makes the appropriate election, and the amount reinvested in replacement property is less than the amount realized, realized gain is: | |||
a. | Recognized to the extent of realized gain. | ||
b. | Permanently not subject to taxation. | ||
c. | Recognized to the extent of the deficiency (amount realized not reinvested) | Correct | If the amount reinvested in replacement property is less than the amount realized, realized gain is recognized to the extent of the deficiency. Deficiency is the shortfall in amount reinvested. |
d. | Recognized to the extent of the amount reinvested in excess of the adjusted basis. | ||