The Following Assets in Jack's Business Were Sold in 2015

question 96

Multiple Choice

The following assets in Jack's business were sold in 2015: Asset Holding Period Gain/(Loss) Office Equipment 6 years $1,100 Automobile 8 months ($ 800) ABC Stock (capital asset) 2 years $1,400 ​ The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2015 (the year of sale) ,Jack should report what amount of net capital gain and net ordinary income?

• A)$1,700 LTCG.
• B)$600 LTCG and $300 ordinary gain.
• C)$1,400 LTCG and $300 ordinary gain.
• D)$2,500 LTCG and $800 ordinary loss.
• E)None of the above.

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Definitions:

Reserve Requirement

The mandate by central banks determining the minimum amount of reserves that must be held by a commercial bank, directly affecting the bank's capacity to lend.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, laws, or internal controls.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

Minting Coins

The process of manufacturing coins as a form of currency, typically by a government or authorized agency.