The Following Assets in Jack's Business Were Sold in 2017

question 27

Multiple Choice

The following assets in Jack's business were sold in 2017: ​
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 2017 (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:

Direct Investment

An investment in the form of a controlling ownership in a business in one country by an entity based in another country.

Exporting

The business practice of selling goods or services produced in one country to buyers in another country.

Indirect Export

The process of selling goods or services to a foreign market through intermediaries, rather than directly to the end purchaser.

Japanese Distributors

Companies or individuals in Japan that distribute products or services from manufacturers to retail locations or directly to consumers within the Japanese market.