Heidi Invested in a Mid-Sized Local Company with Gross Assets

question 45

Multiple Choice

Heidi invested in a mid-sized local company with gross assets of $17,000,000.Heidi purchased 2,000 shares for $44,000 in 2000.In 2016,Heidi sold the stock for $84,000.How is the gain treated for tax purposes?

• A)$40,000 capital gain and taxed at preferential rates.
• B)$20,000 excluded from gross income under Section 1202 and $20,000 taxed at 28%.
• C)$20,000 excluded from gross income under Section 1202 with the remaining gain recognized and taxed at regular rates.
• D)$20,000 excluded from gross income under Section 1202 and $20,000 taxed at preferential capital gains rates.

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Definitions:

Financial Transactions

The exchange of monetary assets between parties, including buying, selling, or trading of goods, services, or financial instruments.

Used Goods

Items that have been previously owned and utilized by another party, often sold at a lower price than equivalent new items.

National Income

The total income earned by a country's residents and businesses, including wages, profits, and taxes minus subsidies, within a specific time period.

Corporate Profits

The total income earned by companies after all expenses and taxes have been deducted, indicative of business health and economic conditions.