Martha Has Both Long-Term and Short-Term 2011 Capital Gains and Losses

question 80

Multiple Choice

Martha has both long-term and short-term 2011 capital gains and losses. The result of netting these gains and losses is a net long-term capital loss. Martha has no qualified dividend income. Also, Martha's 2011 taxable income puts her in the 28% tax bracket. Which of the following is correct?

• A) Martha will use Parts I, II, and III of 2011 Form 1040 Schedule D.
• B) Martha will not benefit from the special treatment for long-term capital gains.
• C) Martha will have a capital loss deduction.
• D) All of the above.
• E) None of the above.

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Definitions:

MACRS Depreciation

Stands for Modified Accelerated Cost Recovery System, which is a method of depreciation in the U.S. that allows for the accelerated write-off of property under certain conditions.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Depreciation Schedule

A table that shows the decline in value of an asset over time, which impacts financial and tax reporting.

Corporate Tax Rate

The percentage of a corporation's profit that is paid as tax to the government.