On May 18 of Last Year,Carter Sells Unlisted Stock with a Cost

question 42

Multiple Choice

On May 18 of last year,Carter sells unlisted stock with a cost of $24,000 for $60,000.Carter collects $20,000 initially and is scheduled to receive $10,000 each year for four years starting this year plus an acceptable rate of interest.After receiving the first $10,000 scheduled installment payment,Carter is unable to collect any further payments.After incurring legal fees of $1,000,Carter recovers a portion of the stock valued at $26,000.As a result of the repossession,Carter must report

• A)ordinary income of $9,000.
• B)capital gain of $9,000.
• C)ordinary income of $13,000.
• D)capital gain of $13,000.

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Definitions:

G. Harrold Carswell

A controversial figure nominated for the U.S. Supreme Court in 1970, known for his conservative views and opposition by civil rights groups.

United States Supreme Court

The highest court in the United States, serving as the final arbiter of disputes under federal law and the Constitution.

Segregation

The enforced separation of different racial groups in a country, community, or establishment.

Richard Nixon

The 37th President of the United States, known for his foreign policy achievements and the Watergate scandal which led to his resignation.