They expire after 5 years choices c and d are

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: indefinitely. They expire after 5 years. Choices "c" and "d" are incorrect. A C corporation cannot deduct net capital losses from ordinary income. CPA-01665 Type1 M/C A-D Corr Ans: D PM#2 R 3-01 2. CPA-01665 ARE Nov 95 #7 Page 19 Baker Corp., a calendar year C corporation, realized taxable income of $36,000 from its regular business operations for calendar year 1994. In addition, Baker had the following capital gains and losses during 1994: Short-term capital gain Short-term capital loss Long-term capital gain Long-term capital loss $8,500 (4,000) 1,500 (3,500) Baker did not realize any other capital gains or losses since it began operations. What is Baker's total taxable income for 1994? a. b. c. d. $46,000 $42,000 $40,500 $38,500 CPA-01665 Explanation Choice "d" is correct. Capital losses offset capital gains. If a corporation has net capital gains, they are taxed at ordinary (corporate) income tax rates. Taxable income from business operations Short-term capital gain Short-term capital loss Long-term capital gain Long-term capital loss Net capital gain Taxable...
View Full Document

This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

Ask a homework question - tutors are online