Roland,Shedrick,and Tyrone Corporations Formed an Affiliated Group a Number of Years

question 44

Multiple Choice

Roland,Shedrick,and Tyrone Corporations formed an affiliated group a number of years ago,which has since filed consolidated tax returns.No prior Sec 1231 losses have been reported by any group member.The group had a consolidated capital loss carryover last year.For the current year,the group reports the following results: Which of following statements is incorrect?

• A)No Sec.1231 recapture can occur this year.
• B)The net capital gain is taxed at the regular corporate tax rates.
• C)The Sec.1231 loss is treated as an ordinary loss.
• D)The net capital gain is $20,000.

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Definitions:

Project Risk

The potential for losses or negative outcomes on a project due to various factors such as cost overruns, underperformance, or market changes.

Equity Financing

A method of raising capital by selling company shares to investors, thereby offering them a portion of the ownership.

Weighted Average Cost

An inventory valuation method that calculates inventory and cost of goods sold based on the average cost of all similar items in inventory.

Profitable Project

A project that generates more revenue than its operating and other costs.