Capital Gains Tax Quiz

You are charged capital gains tax when you _____ an asset.

• Sell

• Buy

• Keep

If you have a capital gain, your selling price is __________ your purchase price.

• Lower than

• Higher than

• The same as

What is the Significance of short-term capital gains?

• They are treated the same as long-term capital gains in most cases

• They are subject to additional excise taxes over the long term rates.

• They are effectively taxed as ordinary income.

Which of the following types of income is investment income?

• Stock Dividends

• Real Estate Trusts

• Both of the Above

Which type of proceed indicates how much you earn before deducting any commissions or fees?

• Net

• Gross

• Final

Elton declared bankruptcy in the current year. Included in the liabilities discharged in the bankruptcy was a $15,000 personal loan Elton had received from his friend, Edward, two years ago. How would Edward treat this for tax purposes?

• Ordinary loss on Form 4797

• Long-term capital loss on Schedule D

• Short-term capital loss on Schedule D

• Investment expense subject to 2% miscellaneous itemized deduction limitation

What is the cost basis of an investment you receive as a gift?

• Original Price of the gift

• original price of the gift plus 10%

• Original price of the gift less 10%

What is the basic definition of a net capital gain?

• The excess of long-term capital gains carried in an account over its short-term capital gains.

• The total cumulative amount of gains carried in an investment account over its full time horizon.

• The excess of net long-term capital gain for the taxable year over net short-term capital loss for such year.

Which of the following is true regarding a nonbusiness bad debt?

• It is deductible as a short-term capital loss.

• It is not deductible.

• It is deductible only if you itemize.

• It is deductible as a long-term capital loss

How should an individual report the following transactions on a return?

- Total short-term capital losses $6,000

- Total short-term capital gains $15,000

- Total long-term capital losses $10,000

- Total long-term capital gains $10,000

• $0 net capital gain

• $6,000 net capital gain

• $9,000 net capital gain

• $21,000 net capital gain