Problem Set #5

Problem Set #5 - Daniel Paterson 12:30 Problem Set 5...

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12:30 Problem Set 5 Chapter 11 11. Capital assets are assets that taxpayers buy and hold with appreciation potential. Examples of capital assets are artwork, corporate stocks, and bonds. 22. A wash sale occurs when an investor sells or trades stock or securities at a loss and within 30 days either before or after the day of the sale buys substantially identical stocks or securities. The purpose of the wash sale rule is to prevent taxpayers from accelerating losses on securities that have declined in value without actually altering their investment in securities. The 61 day period ensures that taxpayers cannot deduct losses from stock sales without exposing themselves to the risk that the stock they sold will subsequently increase in value. 23. Nick would not get to deduct the loss on the sale of his car because losses from the sale of personal uses capital assets cannot be deducted. 42. A passive activity is defined as any activity which involves the conduct of a trade or business, and in which the taxpayer does not materially participate. Examples of possible losses that can be characterized as passive include rental activities, real estate, and limited partners in partnerships. Participants in all other trade or business activities are passive unless their involvement in an activity is regular, continuous, and substantial. 53. 56.
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This note was uploaded on 08/22/2011 for the course ACIS 3314 taught by Professor Hicks during the Spring '09 term at Virginia Tech.

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Problem Set #5 - Daniel Paterson 12:30 Problem Set 5...

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