For purposes of taxation of capital gains:

Question

Quizplus · Accepted Answer

Short-term capital gains are actually taxed at ordinary income tax rates, not 5 percent (A is incorrect). Ordinary income tax rates are indeed applied to gains on collectibles (B is correct), but this answer is not the best choice because it does not take into account the treatment of other assets. Option D is incorrect because any gain recognized on the disposition of a Section 1245 asset may be classified as ordinary income to the extent of the amount of previously claimed depreciation deductions. Option C is correct because Section 1231 assets may be treated as long-term capital gains, meaning they are taxed at a lower rate, and losses may be deducted as ordinary losses, providing a tax advantage.

For Purposes of Taxation of Capital Gains