Gilberto Invested in a Mid-Size Local Company with Gross Assets

question 75

Multiple Choice

Gilberto invested in a mid-size local company with gross assets of $16,000,000.Gilberto purchased 1,000 shares for $48,000 in 2000.In 2017,Gilberto sold the stock for $78,000.How is the gain treated for tax purposes?

• A)$30,000 capital gain,taxed at preferential rates.
• B)$15,000 excluded from gross income under Section 1202 with the remaining gain recognized and taxed at regular tax rates.
• C)$15,000 excluded from gross income under Section 1202 and $15,000 taxed at 28%.
• D)$15,000 excluded from gross income under Section 1202 and $15,000 taxed at preferential rates.

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Definitions:

Direct Costs

Costs that are directly attributable to the production of goods or provision of services, such as raw materials and direct labor.

Indirect Costs

Costs that are not directly attributable to the production of goods or services and cannot be traced back to a single product, service, or project, such as rent and utilities.

Responsibility Accounting System

An accounting framework that tracks financial performance by specific areas of responsibility, such as departments or managers.

Managers' Performance

Refers to the assessment and evaluation of the effectiveness and efficiency with which managers achieve business objectives and goals.