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.

---

Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but retained by the company for reinvestment.

Total Assets

The sum of all currently owned resources that have value which can be converted into cash and are used in operating the company.

Liabilities

Financial obligations or debts a company owes to others, expected to be settled over time through the transfer of assets, provision of services, or other economic benefits.

Statement of Stockholders' Equity

Financial documentation that shows changes in the value of a company's equity over a reporting period.