Prop Transactions - Capital Gains & Losses

Question 1

What is the maximum tax rate for capital gains from the sale of collectibles?

Answer 1

The maximum rate is 28%.

Question 2

How can corporations use their capital loss deduction?

Answer 2

1. Can only use capital losses to offset capital gain net income; no deduction for net capital losses;
2. Unused losses are carried back three years and forward five years.

Question 3

What is the percentage of qualified small business exclusion of stock gain?

Answer 3

50% (increased to higher levels for certain temporary periods).

Question 4

Describe the elements of the net capital loss deduction for individuals.

Answer 4

1. Deductible up to $3,000 per year;
2. For AGI;
3. Also limited to taxable income;
4. Excess loss carries forward; no limit on carryforward period.

Question 5

List the characteristics of ordinary loss deduction on sale of worthless small business stock.

Answer 5

1. Corporation issued stock for less than $1 million;
2. Corporation must conduct an active business;
3. Taxpayer received stock from corporation in initial offering.

Question 6

List the qualified small business stock exclusion of gain requirements.

Answer 6

1. Stock held for more than five years after initial issuance;
2. Stock from active corporation with assets less than $50 million.

Question 7

What is the net capital loss limit for individuals?

Answer 7

The loss limit is $3,000.

Question 8

What is the ordinary loss deduction limit on the sale of a worthless small business stock?

Answer 8

$50,000 ($100,000 if married filing joint).