SOUTH-WESTERN FEDERAL TAXATION
2024 CORPORATIONS PARTNERSHIPS
ESTATES AND TRUSTS 47TH EDITION
RAABE NELLEN YOUNG CRIPE LASSAR
PERSELLIN CUCCIA TEST BANK
COMPREHENSIVE TEST PAPER 2026
COMPLETE ANSWERS ACCURATE
⫸ Capital asset. Answer: Broadly speaking, all assets are capital except
those specifically excluded from that definition by the Code. Major
categories of noncapital assets include property held for resale in the
normal course of business (inventory), trade accounts and notes
receivable, and depreciable property and real estate used in a trade or
business (§ 1231 assets). § 1221.
⫸ Capital gain. Answer: The gain from the sale or exchange of a capital
asset.
⫸ Capital loss. Answer: The loss from the sale or exchange of a capital
asset.
⫸ Collectibles. Answer: A special type of capital asset, the gain from
which is taxed at a maximum rate of 28 percent if the holding period is
more than one year. Examples include art, rugs, antiques, gems, metals,
stamps, some coins and bullion, and alcoholic beverages held for
investment.
, ⫸ Franchise. Answer: An agreement that gives the transferee the right
to distribute, sell, or provide goods, services, or facilities within a
specified area. The cost of obtaining a franchise may be amortized over
a statutory period of 15 years. In general, the franchisor's gain on the
sale of franchise rights is an ordinary gain because the franchisor retains
a significant power, right, or continuing interest in the subject of the
franchise. §§ 197 and 1253.
⫸ Lessee. Answer: One who rents property from another. In the case of
real estate, the lessee is also known as the tenant.
⫸ Lessor. Answer: One who rents property to another. In the case of
real estate, the lessor is also known as the landlord.
⫸ Long-term nonpersonal use capital assets. Answer: Includes
investment property with a long-term holding period. Such property
disposed of by casualty or theft may receive § 1231 treatment.
⫸ Net capital gain (NCG). Answer: The excess of the net long-term
capital gain for the tax year over the net short-term capital loss. The net
capital gain of an individual taxpayer is eligible for the alternative tax. §
1222(11).
⫸ Net capital loss (NCL). Answer: The excess of the losses from sales
or exchanges of capital assets over the gains from sales or exchanges of
such assets. Up to $3,000 per year of the net capital loss may be
deductible by noncorporate taxpayers against ordinary income. The
excess net capital loss carries over to future tax years. For corporate
2024 CORPORATIONS PARTNERSHIPS
ESTATES AND TRUSTS 47TH EDITION
RAABE NELLEN YOUNG CRIPE LASSAR
PERSELLIN CUCCIA TEST BANK
COMPREHENSIVE TEST PAPER 2026
COMPLETE ANSWERS ACCURATE
⫸ Capital asset. Answer: Broadly speaking, all assets are capital except
those specifically excluded from that definition by the Code. Major
categories of noncapital assets include property held for resale in the
normal course of business (inventory), trade accounts and notes
receivable, and depreciable property and real estate used in a trade or
business (§ 1231 assets). § 1221.
⫸ Capital gain. Answer: The gain from the sale or exchange of a capital
asset.
⫸ Capital loss. Answer: The loss from the sale or exchange of a capital
asset.
⫸ Collectibles. Answer: A special type of capital asset, the gain from
which is taxed at a maximum rate of 28 percent if the holding period is
more than one year. Examples include art, rugs, antiques, gems, metals,
stamps, some coins and bullion, and alcoholic beverages held for
investment.
, ⫸ Franchise. Answer: An agreement that gives the transferee the right
to distribute, sell, or provide goods, services, or facilities within a
specified area. The cost of obtaining a franchise may be amortized over
a statutory period of 15 years. In general, the franchisor's gain on the
sale of franchise rights is an ordinary gain because the franchisor retains
a significant power, right, or continuing interest in the subject of the
franchise. §§ 197 and 1253.
⫸ Lessee. Answer: One who rents property from another. In the case of
real estate, the lessee is also known as the tenant.
⫸ Lessor. Answer: One who rents property to another. In the case of
real estate, the lessor is also known as the landlord.
⫸ Long-term nonpersonal use capital assets. Answer: Includes
investment property with a long-term holding period. Such property
disposed of by casualty or theft may receive § 1231 treatment.
⫸ Net capital gain (NCG). Answer: The excess of the net long-term
capital gain for the tax year over the net short-term capital loss. The net
capital gain of an individual taxpayer is eligible for the alternative tax. §
1222(11).
⫸ Net capital loss (NCL). Answer: The excess of the losses from sales
or exchanges of capital assets over the gains from sales or exchanges of
such assets. Up to $3,000 per year of the net capital loss may be
deductible by noncorporate taxpayers against ordinary income. The
excess net capital loss carries over to future tax years. For corporate
