Studios Reported a Net Capital Loss of $39,000 in Year

question 33

Multiple Choice

Studios reported a net capital loss of $39,000 in Year 5. It reported net capital gains of $32,000 in Year 4 and $45,000 in Year 6. What is the amount and nature of the book-tax difference in Year 6 related to the net capital carryover?

• A) $38,000 unfavorable.
• B) $38,000 favorable.
• C) $7,000 unfavorable.
• D) $7,000 favorable.

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Definitions:

Proactive

Characterizes an approach that anticipates and initiates change rather than reacting to events.

Contingency Planning

The process of preparing strategies to address unexpected events or emergencies that could negatively impact operations.

Changing Circumstances

Refers to the varying conditions or situations that can affect an individual's or organization's decisions and actions.

Implemented

The act of carrying out a plan, policy, or method into action to achieve a given goal.