Ch 16 Homework Solutions

Ch 16 Homework Solutions - Ch 16 Homework Solutions 7....

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Ch 16 Homework Solutions 7. Generally, the assets held by a trader of securities are inventory, and, therefore, an ordinary asset. However, by the end of each business day, the trader can designate which assets acquired are going to be held for investment rather than as inventory. The designated securities are capital assets. p. 16-7 19. All the assets are capital assets because they do not fit any of the items listed in § 1221 as not capital assets. The antique truck is a ‘‘collectible. Therefore, the $5,000 loss ($42,000 sale price – $47,000 basis) is a long-term capital loss that would first be netted against any 28% long-term capital gain. The Blue Growth Fund $16,000 gain ($28,000 sale price – $12,000 basis) is a long- term capital gain that is potentially taxable at 0% and/or 15%. The Orange bonds are sold for a $7,250 gain ($42,000 proceeds – $750 interest income – $34,000 basis). The gain is a long-term capital gain potentially taxable at 0% and/or 15%. The sale of the Green stock results in a $2,000 ($11,000 sale price – $13,000 basis) short-term capital loss because the stock was held one year or less. The $750 interest income is includible in Eric’s gross income pp. 16-4, 16-5, and 16-20 to
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Ch 16 Homework Solutions - Ch 16 Homework Solutions 7....

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