Which of the Following Statements Regarding Capital Gains and Losses

question 88

Multiple Choice

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

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

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Definitions:

Common Macroeconomic Factor

Economic variables that affect a broad segment of the economy and consequently can influence the performance and value of financial investments.

Uncertainty

The degree of variability in investment returns, often associated with the lack of predictability in markets and future events.

Well-Diversified Portfolio

A portfolio that contains a mix of assets in such a way as to reduce the risk of investing by spreading investments across various sectors, industries, or asset classes.

Standard Deviation

Standard deviation is a statistic that measures the dispersion or variability of a dataset relative to its mean, often used to gauge volatility.