Geneva,a sole proprietor,sold one of her business assets for a $20,000 long-term capital gain.Geneva's marginal tax rate is 35%.Gulf,a C corporation,sold one of its assets for a $20,000 long-term capital gain.Gulf's marginal tax rate is 35%.What tax rates are applicable to these capital gains?
A)15% rate applies to both Geneva and Gulf.
B)15% rate applies to Geneva and 35% rate applies to Gulf.
C)15% rate applies to Gulf and 35% rate applies to Geneva.
D)35% rate applies to both Geneva and Gulf.
E)None of the above.

Question

Quizplus · Accepted Answer

Geneva reports the long-term capital gain on her individual tax return,and it is subject to a maximum tax rate of 15%.Corporations do not receive special tax treatment for its long-term capital gain.Therefore,Gulf's gain will be taxed at 35%.

Geneva,a Sole Proprietor,sold One of Her Business Assets for a $20,000