Martha Has Both Long-Term and Short-Term 2016 Capital Gains and Losses

question 45

Multiple Choice

Martha has both long-term and short-term 2016 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 2016 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 2016 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:

Finishing Department

The final stage in the manufacturing process where products are completed and prepared for sale.

Transferred Out

In cost accounting, refers to the costs that have been moved from one production department to another in the process of manufacturing.

Predetermined Overhead Allocation Rate

This rate is calculated before the accounting period begins and is used to allocate overhead costs to products or services based on a specific activity base.

Direct Labor Cost

The wages and benefits paid to workers who are directly involved in the production of goods.