Which of the Following Statements Regarding Capital Gains and Losses

question 34

Multiple Choice

Which of the following statements regarding capital gains and losses is false?

• A) C corporations can carry back net capital losses three years and they can carry them forward for five years.
• B) In terms of tax treatment, corporations generally prefer capital gains to ordinary income.
• C) Corporations must apply capital loss carrybacks and carryovers in a particular order.
• D) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year.

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Definitions:

Distrains

The act of legally seizing someone's property as a way to secure the payment of debts or obligations.

Nuisance

An act, condition, or thing that is annoying, inconvenient, or causes damage to legal rights.

Injunction

An equitable remedy of the court that orders the person or persons named therein to refrain from doing certain acts.

Yearly Periodic Lease

A lease agreement that automatically renews each year unless terminated by either party.