Tax4001 Ch7 2024/2025 Exam Questions
and Verified Answers | Already Graded
A+
from a tax perspective the real advantages of investing in capital assets -
🧠ANSWER ✔✔(1) gains are deferred for tax purposes until the taxpayer
sells or otherwise disposes of the assets18 and
(2) gains generally are taxed at preferential rates relative to ordinary
income.
Why the favorable treatment? - 🧠ANSWER ✔✔One reason is that
taxpayers may not have the wherewithal (cash) to pay the tax on their
gains until they sell the investment.
Another is that the preferential tax rate provides an incentive for taxpayers
to invest in assets that may stimulate the economy.
most long-term capital gains are taxed at either 0 percent, 15 percent, or 20
percent, - 🧠ANSWER ✔✔depending on the rate at which the gains would
be taxed if they were ordinary income.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
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PRIVACY STATEMENT. ALL RIGHTS RESERVED
, Long-term capital gains that would be taxed at 10 or 15 percent -
🧠ANSWER ✔✔as ordinary income are taxed at 0 percent;
Short-term capital gains are taxed - 🧠ANSWER ✔✔at ordinary rather than
preferential rates.
long-term capital gains are taxed - 🧠ANSWER ✔✔at preferential rates.
gains that would be taxed at 39.6 percent as ordinary income - 🧠ANSWER
✔✔are taxed at 20 percent;
unrecaptured §1250 gain - 🧠ANSWER ✔✔certain long-term capital gains
are taxed at a maximum rate of 25 percent
collectibles and qualified small business stock - 🧠ANSWER ✔✔others are
taxed at a maximum 28 percent rate
losses on the sale of personal-use assets are not deductible - 🧠ANSWER
✔✔therefore never become part of the netting process.
When taxpayers sell capital assets at a loss to related parties, - 🧠ANSWER
✔✔they are not able to deduct the loss.
If the taxpayer believes that the stocks with unrealized losses are likely to
appreciate in the near future, she may prefer not to sell those stocks but
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
and Verified Answers | Already Graded
A+
from a tax perspective the real advantages of investing in capital assets -
🧠ANSWER ✔✔(1) gains are deferred for tax purposes until the taxpayer
sells or otherwise disposes of the assets18 and
(2) gains generally are taxed at preferential rates relative to ordinary
income.
Why the favorable treatment? - 🧠ANSWER ✔✔One reason is that
taxpayers may not have the wherewithal (cash) to pay the tax on their
gains until they sell the investment.
Another is that the preferential tax rate provides an incentive for taxpayers
to invest in assets that may stimulate the economy.
most long-term capital gains are taxed at either 0 percent, 15 percent, or 20
percent, - 🧠ANSWER ✔✔depending on the rate at which the gains would
be taxed if they were ordinary income.
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
1
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, Long-term capital gains that would be taxed at 10 or 15 percent -
🧠ANSWER ✔✔as ordinary income are taxed at 0 percent;
Short-term capital gains are taxed - 🧠ANSWER ✔✔at ordinary rather than
preferential rates.
long-term capital gains are taxed - 🧠ANSWER ✔✔at preferential rates.
gains that would be taxed at 39.6 percent as ordinary income - 🧠ANSWER
✔✔are taxed at 20 percent;
unrecaptured §1250 gain - 🧠ANSWER ✔✔certain long-term capital gains
are taxed at a maximum rate of 25 percent
collectibles and qualified small business stock - 🧠ANSWER ✔✔others are
taxed at a maximum 28 percent rate
losses on the sale of personal-use assets are not deductible - 🧠ANSWER
✔✔therefore never become part of the netting process.
When taxpayers sell capital assets at a loss to related parties, - 🧠ANSWER
✔✔they are not able to deduct the loss.
If the taxpayer believes that the stocks with unrealized losses are likely to
appreciate in the near future, she may prefer not to sell those stocks but
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
