Song Ming sold the following assets during the current year: Which one of the following amounts represents her taxable capital gain, net of allowable capital losses, for tax purposes during the current year?

Question

Song Ming sold the following assets during the current year:  Which one of the following amounts represents her taxable capital gain, net of allowable capital losses, for tax purposes during the current year?

Quizplus · Accepted Answer

To calculate the taxable capital gain, we need to subtract the cost of each asset from the sale price of each asset to determine the capital gain or loss for each asset. Then, we add up all the capital gains and subtract any capital losses to arrive at the net capital gain or loss. 
For this question:
- Sale of paintings: capital gain = $800 - $500 = $300
- Sale of antique vase: capital loss = $800 - $900 = -$100
- Sale of stock: capital gain = $1,000 - $700 = $300
- Sale of rental property: capital gain = $10,000 - $9,300 - $400 (cost of improvements) = $300
Net capital gain = $300 + $300 = $600
However, the allowable capital losses are limited to 50% of the capital gains. In this case, 50% of $600 is $300. So, the taxable capital gain after deducting allowable capital losses is $600 - $300 = $300. Therefore, the correct answer is (C) $350, which is not listed, so we can assume it is a mistake and choose the closest option.

Song Ming Sold the Following Assets During the Current Year