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4.Tom Truman sells a business machine that he has owned for four years for $27,000.Tom purchased the machine for $42,000 and has taken $18,000 in depreciation subjectto depreciation recapture. How much and what type of gain will result from this sale?a.$3,000 long-term capital gainb.$3,000 ordinary incomec.$18,000 ordinary income; $3,000 long-term capital gaind.$21,000 ordinary income
21.d. The items listed in (a), (b), (c), and (e) are all items that are listed as not being capitalassets. Temporary investment of idle business cash in marketable corporate securities,however, is a capital asset.2.e. The deductible capital loss is $3,000 as follows:Net short-term capital loss ($1,900 - $4,000 - $700)($2,800)Net long-term capital loss ($800 - $1,000)(200)Deductible capital loss($3,000)3.a. Steve has the following: an LTCG of $2,800 on A stock; an LTCL of $3,000 on Bstock; an STCL of $1,500 on C stock; and an STCL of $4,000 on D stock. Therefore, hehas a net LTCL of $200 and a net STCL of $5,500. With a net overall loss of $5,700, hegets a $3,000 deduction and a carryover of $2,700.