Chapter 16

Question 1

What are the two types of capital assets?

Answer 1

Personal use or investment asset

Question 2

Personal capital assets can only be recognized at what

Answer 2

A gain. Cannot recognize personal assets at a loss

Question 3

What are the three characteristics of a capital asset?

Answer 3

Is it a capital asset, is it used for investment, holding period

Question 4

Short-term and Long-term capital assets are determined by what?

Answer 4

Holding period. Short-term capital assets are <1 year. Long-term capital assets are >1 year

Question 5

Net capital loss is limited to what

Answer 5

$3000 in a year. The rest is c/f

Question 6

What is netting for capital losses?

Answer 6

Capital Gains and Losses must be netted by holding period.

All STCG get netted with STCG
All LTCG get netted with LTCL

Question 7

Are individual transactions limited to 3000 capital loss deduction or all overall transactions?

Answer 7

Overall net is look at for the 3k limit

Question 8

Carry forward for 3k Capital loss rule is how long

Answer 8

Indefinite. Has TVM and MTR implications for when used.

Question 9

Long-term capital gains and short-term capital gains are taxed at what rates?

Answer 9

ST are taxed at ordinary income tax rates

LT are taxed using preferential tax rates

Question 10

LTCG is taxed at what rates?

Answer 10

20% if in higher ordinary MTRS
15% if in middle ordinary MTRS
0% if in lower ordinary MTRS

Question 11

What is the max rate LTCG is taxed at

Answer 11

20%