Pract exam3 part16 2011 - CHAPTER 16 MULTIPLE CHOICE 1. The...

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CHAPTER 16 MULTIPLE CHOICE 1. The tax law requires that capital gains and losses be separated from other types of gains and losses. Among the reasons for this treatment are: a. Long-term capital gains may be taxed at a lower rate than ordinary gains. b. Capital losses that are short term are not deductible. c. Net capital loss is deductible only up to $3,000 per year for individual taxpayers. d. a. and c. e. None of the above. ANS: D Both a net long-term capital gain and a net capital loss are subject to special rules. Consequently, the capital gains and losses must be netted separately from other types of gains and losses. PTS: 1 DIF: 1 REF: p. 16-4 OBJ: 1 NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 2. Recognized gains and losses must be properly classified. Proper classification depends upon: a. The tax status of the property. b. The manner of the property’s disposition. c. The holding period of the property. d. a., b., and c. e. None of the above. ANS: D The proper classification of the gain or loss depends on all three of these characteristics. PTS: 1 DIF: 1 REF: p. 16-3 OBJ: 1 | 4 NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 3. The three tax statuses are: a. Ordinary asset, capital asset, § 1251 asset. b. Capital asset, ordinary asset, § 1231 asset. c. § 1251 asset, investment asset, ordinary asset. d. Investment asset, § 1231 asset, ordinary asset. e. None of the above. ANS: B Although investment assets are generally capital assets, investment asset is not a tax status. PTS: 1 DIF: 1 REF: p. 16-3 OBJ: 1 | 2 16-1
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16-2 2011 Annual Edition/Test Bank NAT: AICPA FN-Reporting | AACSB Analytic MSC: 5 min 4. A business taxpayer sells inventory for $40,000. The adjusted basis of the property is $58,000 at the time of the sale and the inventory had been held more than one year. The taxpayer has: a. No gain or loss. b.
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This note was uploaded on 02/27/2012 for the course ECON 4371 taught by Professor Muir during the Spring '12 term at King Mongkut's Institute of Technology Ladkrabang.

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Pract exam3 part16 2011 - CHAPTER 16 MULTIPLE CHOICE 1. The...

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