An Individual Has the Following Recognized Gains and Losses from Disposition

question 2

Multiple Choice

An individual has the following recognized gains and losses from disposition of § 1231 assets (all the assets were vacant land) : $15,000 gain, $10,000 loss, $25,000 gain, and $2,000 loss. The individual has a $5,500 § 1231 lookback loss. The individual also has a $16,000 net short-term capital loss from the disposition of stock. Which of the following statements is correct?

• A) The taxpayer has $5,500 ordinary gain and $6,500 net long-term capital gain.
• B) The taxpayer has $12,000 net long-term capital gain.
• C) The taxpayer has $28,000 ordinary gain and $16,000 net short-term capital loss.
• D) The taxpayer has $5,500 ordinary loss and $6,500 net long-term capital gain.
• E) None of the above.

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Definitions:

Manufacturing Overhead

Costs that are incurred in the manufacturing process other than direct materials and direct labor, such as utilities, depreciation, and maintenance of equipment.

Denominator Activity Levels

Denominator activity levels refer to the levels of activity used to allocate fixed costs to products or services under activity-based costing or other costing methodologies.

Efficiency Variances

The difference between the actual amount of resources used in production and the standard amount expected, showing how efficiently resources are being used.

Volume Variances

are differences between the expected (budgeted) volumes of production or sales and the actual volumes, impacting revenue, costs, and profits.