The Following Assets in Jack's Business Were Sold in 2018

question 50

Multiple Choice

The following assets in Jack's business were sold in 2018:
The office equipment had a zero adjusted basis and was purchased for $8,000. The automobile was purchased for $2,000 and sold for $1,200. The ABC stock was purchased for $1,800 and sold for $3,200. In 2018 (the year of sale) , Jack should report what amount of net capital gain and net ordinary income?

• A) $1,700 LTCG.
• B) $600 LTCG and $300 ordinary gain.
• C) $1,400 LTCG and $300 ordinary gain.
• D) $2,500 LTCG and $800 ordinary loss.
• E) None of the above.

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Definitions:

Warranty Repairs

Services provided to repair or fix products covered under a warranty at no charge to the customer, typically within a specified time period after purchase.

Estimated Premium Claims

The projected claims that an insurance company expects to pay out based on the premiums it has received.

Coupons Redeemed

The act of exchanging a coupon for a discount, product, or service, usually part of a promotional offering.

Premium Expense

The cost associated with purchasing an insurance policy or the amount over the face value paid for a bond or stock.