Which of the following criteria ultimately determines whether the CRA determines that a taxpayer's trading is speculative in nature, hence making capital gains subject to 100% inclusion for tax purposes? Special knowledge of the securities industry Trading on borrowed funds (or margin) Short periods of ownership Intent of the investor
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- Explain how an investor in an equity REIT may receive a current dividend, part of which may be tax-deferred.Which of the following items can be included in the definition of investment income for purposes of computing the allowed investment interest deduction only if the trust makes a special election? OA. Qualified dividends B. Interest on corporate bonds C. Farm income D. Income from a working interest in oil and gas where the taxpayer does not materially participate in the activityDemonstrate how to identify and account for equity investments classified forreporting purposes as fair value through net income
- Which of the following is not true of the netting process for capital gains and losses? Group of answer choices 1.If a taxpayer has both a NSTCG and a NLTCG or both a NSTCL and a NLTCL, the results are netted in the second stage of the netting process. 2.Long-term capital gains and losses are combined and result in either a net long-term capital gain (NLTCG) or a net long-term capital loss (NLTCL). 3.Short-term capital gains and losses are combined and result in either a net short-term capital gain (NSTCG) or a net short-term capital loss (NSTCL). 4.If a taxpayer has either an NSTCG and an NLTCL or NSTCL and an NLTCG, the results are netted in the second stage of the netting process.What are the general requirements regarding income, investments, and dividends with which a REIT must comply to maintain its tax-exempt status?Why should executory contracts be disclosed in the financial statements? Group of answer choices They create current income tax obligations They create an obligation contingent upon the occurrence of a past event They represent a possible outflow of economic resources None of the above PreviousNext
- **Tax Accounting for Financial Instruments:** Tax accounting for financial instruments involves determining the tax treatment of various financial assets and liabilities, such as stocks, bonds, derivatives, and loans. Here are the key steps and considerations involved in tax accounting for financial instruments: **1.**Classification of Financial Instruments:** - **Different Categories:** Financial instruments may be classified into various categories, such as trading securities, available-for-sale securities, held-to-maturity securities, and loans held for investment. - **Tax Treatment:** The tax treatment of financial instruments varies based on their classification and the specific tax regulations governing each category. **2. **Recognition of Income and Expenses:** - **Interest Income:** Interest income earned on financial instruments, such as bonds or loans, is generally taxable in the period it is accrued or received, depending on the taxpayer's accounting method. - **Dividend…If the IRS increases the capital gain tax, institutional investors' preference for dividends versus repurchases would: a. prefer dividends b. I don't know c. not change d. prefer repurchasesThe most tax-advantaged form of income for investors is Group of answer choices a. long-term capital gain income b. dividend income c. interest income on corporate debt d. Both dividend income and long-term capital gain are equal in their tax advantage
- ASAP Interest earned on a mortgage or mortgage backed security (MBS) is classified as which of the following types of income according to federal tax laws? 1.passive activity income 2.residual income 3.active income 4.portfolio income Explain in shortWhich constitutes a taxable item of gross income? * Compensation for personal injuries O Gain from sale of shares in mutual fund: O Gain from sale of government bonds O Income exempt under treatyWhich of the following creates temporary difference between financial and taxable income? * Interest on treasury debt securities Accelerated depreciation on plant and equipment O Fines from vilation of law Premiums paid for officer's life insurance (comapny is beneficiary)