Intro to Taxation
Showing posts with label Intro to Taxation. Show all posts
Showing posts with label Intro to Taxation. Show all posts

In the same year, a customer has $14,000 of long-term capital losses on stock positions and $4,000 of short-term capital gains on options positions. Which statement is TRUE?

In the same year, a customer has $14,000 of long-term capital losses on stock positions and $4,000 of short-term capital gains on options positions. Which statement is TRUE?



A. The capital losses can be netted against the capital gains and a $10,000 net capital loss is reported, all of which is deductible

B. The capital losses can be netted against the capital gains and a $10,000 net capital loss is reported, $3,000 of which is deductible

C. The $14,000 of capital losses on the stock positions must be reported separately from the $4,000 of capital gains on the options positions, with all $14,000 of capital losses being deductible and all $4,000 of capital gains being taxable

D. The $14,000 of capital losses on the stock positions must be reported separately from the $4,000 of capital gains on the options positions, with only $3,000 of capital losses being deductible and all $4,000 of capital gains being taxable



Answer: B. The capital losses can be netted against the capital gains and a $10,000 net capital loss is reported, $3,000 of which is deductible

A customer has $8,000 of capital losses and $3,000 of capital gains in a tax year. On that year's tax return, the investor has a(n):

A customer has $8,000 of capital losses and $3,000 of capital gains in a tax year. On that year's tax return, the investor has a(n):



A. $3,000 capital loss deduction with no loss carryforward

B. $3,000 capital loss deduction and a $2,000 loss carryforward

C. $3,000 capital loss deduction and a $5,000 loss carryforward

D. $8,000 capital loss deduction



Answer: B. $3,000 capital loss deduction and a $2,000 loss carry forward

Which statement is TRUE about taxation of capital gains?

Which statement is TRUE about taxation of capital gains?



A. Short term capital gains are taxed at higher rates than long term capital gains

B. Short term capital gains are taxed at lower rates than long term capital gains

C. Short term capital gains are taxed at the same rate as long term capital gains

D. Short term capital gains are taxed at ordinary income rates; long term capital gains are tax deferred



Answer: A. short term capital gains are taxed at higher rates than long term capital gains

Which of the following statements are TRUE about capital gains taxes for investors who are not extremely high earners?

Which of the following statements are TRUE about capital gains taxes for investors who are not extremely high earners?



I The maximum tax rate on a short term capital gain is 15%

II The maximum tax rate on a short term capital gain is 37%

III The maximum tax rate on a long term capital gain is 15%

IV The maximum tax rate on a long term capital gain is 37%



Answer: II and III

Which of the following securities transactions would result in a long term capital gain?

Which of the following securities transactions would result in a long term capital gain?



I Purchase 100 shares of ABC stock at $50 on January 2, 2018; Sell 100 shares of ABC stock at $60 on July 2, 2018

II Purchase 100 shares of ABC stock at $50 on January 2, 2018; Sell 100 shares of XYZ stock at $60 on July 2, 2018

III Purchase 100 shares of ABC stock at $50 on January 2, 2018; Sell 100 shares of ABC stock at $60 on January 3, 2019

IV Purchase 100 shares of ABC stock at $50 on January 2, 2018; Sell 100 shares of XYZ stock at $60 on January 2, 2019



Answer: III only

Which statements are TRUE regarding the taxation of capital gains?

Which statements are TRUE regarding the taxation of capital gains?



I A capital gain is considered to be short term if a position is liquidated at a profit after being held for 1 year or less

II A capital gain is considered to be short term if a position is liquidated at a profit after being held for over 1 year

III For investors in the maximum tax bracket, any short term capital gains will be taxed at the same tax rate as that bracket

IV For investors in the maximum tax bracket, any short term capital gains will be taxed at a lower rate than that bracket



Answer: I and III

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