In 2016, Bluebird Corporation Had Net Income from Operations of $100,000

question 38

Multiple Choice

In 2016, Bluebird Corporation had net income from operations of $100,000. Further, Bluebird recognized a long-term capital gain of $30,000, and a short-term capital loss of $45,000. Which of the following statements is correct?

• A)Bluebird Corporation will have taxable income in 2016 of $100,000 and will have a net capital loss of $15,000 that can be carried back 3 years and forward 5 years.
• B)Bluebird Corporation may use the capital loss to offset the capital gain and must carry the net capital loss of $15,000 forward five years as a short-term capital loss.
• C)Bluebird Corporation may deduct $33,000 of the capital loss in 2016 and may carry forward the remainder of the capital loss indefinitely to offset capital gains.
• D)Bluebird Corporation will have taxable income in 2016 of $85,000.
• E)None of the above.

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Definitions:

Simple Interest

Interest calculated only on the initial principal of a deposit or loan, without compounding.

Predicted Score

An estimate of the value of a variable or outcome derived from a statistical model or the analysis of patterns in data.

Y′

A notation often used to represent the predicted values of a dependent variable in a regression model.

Y-intercept

The point where a line crosses the Y-axis in a graph.