Chapter 14 MC

Question 1

Which of the following statements concerning the taxation of capital gains and losses of individual taxpayers is correct?

Answer 1

Up to $3,000 of net capital losses ($1,500 if married filing separately) may be used to offset ordinary income in any given year.
(B). (A) is incorrect because the maximum rate is generally 15 percent. (C) is incorrect because collectibles gain is subject to a 28 percent maximum rate. (D) is incorrect because such unrecaptured depreciation is subject to a 25 percent maximum rate.

Question 2

Which of the following statements concerning the rules for taxation of capital gains for individual taxpayers is correct?

Answer 2

There must generally be a sale or exchange of a capital asset in order for the capital gain or loss rules to apply.
(C). In the case of capital assets, realization of gain or loss generally occurs through a sale or taxable exchange of the asset.