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.