On June 1,2011,Bruce Purchased an Option to Buy 1,000 Shares

question 37

Multiple Choice

On June 1,2011,Bruce purchased an option to buy 1,000 shares of General,Inc.at $30 per share.He purchased the option for $2,000.It was to remain in effect for six months.The market experienced a decline during the latter part of the year,so Bruce decided to let the option lapse as of December 1,2011.On his 2011 tax return,what should Bruce report?

• A) A $2,000 long-term capital loss.
• B) A $2,000 short-term capital loss.
• C) A $2,000 § 1231 loss.
• D) A $2,000 ordinary loss.
• E) None of the above.

---

Definitions:

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and factory overhead.

Overhead Applied

is the amount of manufacturing overhead cost allocated to each product or job, based on a predetermined overhead rate.

Machining Department

A section within a manufacturing facility where machining processes, such as cutting, shaping, and drilling, are carried out.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as maintenance, supervision, and utilities, excluding direct materials and direct labor.