For Minimal Tax Consequences, When Your Stock Increases in Value

question 53

Multiple Choice

For minimal tax consequences, when your stock increases in value it should be held for

• A) four months or longer.
• B) over a year.
• C) under a year.
• D) five years or longer.

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Definitions:

Accounts Receivable

Accounts receivable represents the money owed to a company for goods or services delivered or used but not yet paid for by customers.

Discounted Payback Period

The time it takes for an investment to generate cash flows sufficient to recover the initial cost, adjusted for the time value of money.

Straight-line Depreciation

A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Salvage Value

The estimated resale value of an asset after its useful life has ended.