An Individual Had the Following Gains and Losses During 2011

question 18

Multiple Choice

An individual had the following gains and losses during 2011 on property held for the long-term holding period: sale of Magenta common stock ($8,000 gain) ; sale of real property used in the taxpayer's business ($1,800 loss) ; destruction of real property used in the taxpayer's business by flood ($1,000 loss) .Which of the following is correct?

• A) The flood loss would reduce the real property sale loss.
• B) The flood loss would reduce the stock sale gain.
• C) The sale of real property loss would be netted against the stock sale gain.
• D) The sale of real property is a § 1231 loss.
• E) None of the above.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Decision-Making Process

A series of steps taken to identify and evaluate options to make a choice or solve a problem.

External Financial Reports

Financial statements and reports prepared for external users, such as shareholders, creditors, and regulatory agencies.

Strategic Objectives

Goals set by a business to guide its overarching strategy and direction for future growth and success.