Nilex Company Sold Three Operating Assets This Year

question 28

Multiple Choice

Nilex Company sold three operating assets this year.Nilex recognized a $14,100 Section 1231 loss on the first sale,a $20,000 Section 1231 loss on the second sale,and a $19,600 Section 1231 gain on the third sale.Which of the following statements is true?

• A)Nilex can deduct its $14,500 net Section 1231 loss.
• B)Nilex can deduct its $34,100 net Section 1231 loss and can treat its $19,600 Section 1231 gain as a capital gain.
• C)Nilex must treat its $14,500 net Section 1231 loss as a capital loss.
• D)None of the above statements is true.

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Definitions:

Hang Seng

A market index that represents the performance of the largest companies listed on the Hong Kong Stock Exchange.

Callable Bond

A type of bond that can be redeemed by the issuer before its maturity date, typically at a premium price.

Convertible Bond

A type of bond that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Yankee Bond

A bond issued in the United States by foreign banks and corporations, denominated in U.S. dollars.