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NEW QUESTION: 1
Which of the following sales should be reported as a capital gain?
A. Sale of inventory.
B. Real property subdivided and sold by a dealer.
C. Sale of equipment.
D. Government bonds sold by an individual investor.
Answer: D
Explanation:
Explanation
Choice "d" is correct. Government bonds held by an individual investor are considered capital assets in
the hands of the investor. When these types of security investments are sold, the resulting gain or loss is
reported as capital.
Choice "a" is incorrect. In this case, we must assume that the BEST answer is option "d" (as that option
would ALWAYS result in capital gain or loss treatment) and that the examiners are assuming that the
equipment is depreciable equipment that has been used in a business for over one year. [If the equipment
had been considered a personal asset by the examiners and had sold for a gain, it would also be a capital
asset that sold for a capital gain, and there would be two correct answers. Remember that the correct
answer is the option that best answers the question.] Depreciable equipment used in a business and held
for over one year falls under the category of Section 1245 property. When Section 1245 assets are sold at
a gain, all the accumulated depreciation on the asset is recaptured as ordinary income (the same
category as the depreciation expense was deducted against), and any remaining gain (typically, in
practice, this is not the case, though, as the asset would have had to sell for an amount greater than its
purchase price) is capital gain under Code Section 1231. [Note that Section 1245 applies only to gains. If
the asset had sold for a loss, the loss would have been ordinary under Section 1231.]
Choice "b" is incorrect. Real property sold by a dealer is considered inventory and results in ordinary
income or ordinary losses upon sale. Inventory is not a capital asset and is not afforded the capital gain
benefits.
Choice "c" is incorrect. Inventory is not a capital asset and is not afforded the capital gain benefits. The
sale of inventory results in ordinary income or loss (e.g., gross profit on sales) being reported on the tax
return, as inventory is an asset held for sale in the ordinary course of business.

NEW QUESTION: 2
Robert, a 17-year-old father, consulted a nurse and said "I don't know if I'm using the condoms properly". The nurse should respond correctly that condoms should be:
A. fitted against the tip of the penis without space
B. blown first to check for any holes
C. lubricated before use
D. done after an erection
Answer: D
Explanation:
Explanation: Condoms should be positioned after the penis is erected to maintain the fit.

NEW QUESTION: 3
Which of the following does not apply to a private company which is about to declare a dividend?
A. The company must take account of accumulated realized losses.
B. The company's net assets must equal the total of called up share capital plus un-distributable reserves.
C. The company must have accumulated realized profits.
D. There must be profits available for distribution as a dividend.
Answer: B

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