Which of the Following Statements Regarding Capital Gains and Losses

question 88

Multiple Choice

Which of the following statements regarding capital gains and losses is false?

• A) In terms of tax treatment, corporations generally prefer capital gains to ordinary income.
• B) Like individuals, corporations can deduct $3,000 of net capital losses against ordinary income in a given year.
• C) C corporations can carry back net capital losses three years and they can carry them forward for five years.
• D) Corporations must apply capital loss carrybacks and carryovers in a particular order.

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Definitions:

Consolidation Purposes

The objective of amalgamating financial statements from various entities within a single corporate group to present a unified financial position and results of operations.

Eliminate Unrecognized

A process in accounting, often related to consolidation, where unrealized profits, losses, or transactions within or among entities are removed from financial statements.

Intra-entity Gross Profit

The profit recognized on transactions conducted within the same entity, which may need to be eliminated in consolidated reporting.

Intra-entity Gross Profit

The profit recognized from transactions within the same company, affecting consolidated financial statements.