MsBeal Recognized a $42,400 Net Long-Term Capital Gain and a $33,000

question 62

Multiple Choice

Ms.Beal recognized a $42,400 net long-term capital gain and a $33,000 net short-term capital loss this year.What is her current net income tax cost from her capital transactions if her marginal rate on ordinary income is 39.6%?

• A)$8,480
• B)$1,410
• C)$1,880
• D)$6,360

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Definitions:

Nominal Rate

The stated interest rate of an investment or loan, which does not account for compounding or inflation effects.

Monthly Compounded

A method where interest adds to the principal sum at the end of each month, allowing for the interest in the next month to be based on the new total.

Annuity Investment

A financial product typically sold by insurance companies that provides periodic payments to the holder for a defined period of time or for life.

Effective Rate

The interest rate on a loan or financial product restated from the nominal rate as an interest rate with annual compound interest payable in arrears.