Mr Imhoff Recognized a $25,700 Net Long-Term Capital Gain and a $33,000

question 97

Multiple Choice

Mr. Imhoff recognized a $25,700 net long-term capital gain and a $33,000 net short-term capital loss this year. What is his current year tax savings from the capital loss if his marginal rate on ordinary income is 35% and his preferential rate on adjusted net capital gain is 20%?

• A) $0
• B) $6,190 tax savings
• C) $1,050 tax savings
• D) $7,695 tax cost

---

Definitions:

British Pounds

The currency of the United Kingdom, used as a medium of exchange within the country and sometimes beyond.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific period.

Fair Hedge

A hedge that is accounted for at fair value, with changes in fair value recognized in earnings, to offset the exposure of an identified risk.