What is a Capital Asset?, Holding Period, Calculation of Gain or Loss, and Net Capital Gains (LO 4.1, 4.2, 4.3, 4.5)During 2020, Tom sold GM stock for $22,600. The stock was purchased 4 years ago for $31,640. Tom also sold Ford Motor Company bonds for $79,100. The bonds were purchased 2 months ago for $67,235. Home Depotstock, purchased 2 years ago for $2,260, was sold by Tom for $3,390.Calculate Tom's net gain or loss, and indicate the nature of the gain or loss.X Net short-term capital gain v

Calculation: GM : $ 22,600-$31,640=-9,040 Home : $3,390-$2,260= 1,130 Ford : $79,100- $67,235=…

Answered: The stock was purchased 4 years ago fa…

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The stock was purchased 4 years ago fa old by Tom for $3,390. he nature of the gain or loss. in v

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter3: Computing The Tax

Section: Chapter Questions

Problem 23CE

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

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What is a Capital Asset?, Holding Period, Calculation of Gain or Loss, and Net Capital Gains (LO 4.1, 4.2, 4.3, 4.5)
During 2020, Tom sold GM stock for $22,600. The stock was purchased 4 years ago for $31,640. Tom also sold Ford Motor Company bonds for $79,100. The bonds were purchased 2 months ago for $67,235. Home Depot
stock, purchased 2 years ago for $2,260, was sold by Tom for $3,390.
Calculate Tom's net gain or loss, and indicate the nature of the gain or loss.
X Net short-term capital gain v

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