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P1-U07 · PART 1 · SOURCE CYCLE 2026-2027
Capital Gains and Losses
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.
Q1.How is a digital asset treated for federal income tax purposes?
As property; the general tax principles for property transactions apply.
Q2.Recall the rule for this EA objective in Income And Assets: Basis of stock after stock splits and/or stock dividends (e.g., research, schedules, brokerage records)
The old-stock basis is allocated between the old and new stock
Q3.Recall the rule for this EA objective in Income And Assets: Options (e.g., stock, commodity, ISO, ESPP)
The option cost
Q4.Recall the rule for this EA objective in Income And Assets: Non-business bad debts
As a short-term capital loss
Q5.Recall the rule for this EA objective in Income And Assets: Investor versus trader
Profit from daily market movements rather than dividends, interest, or capital appreciation
Q6.How are capital gains and losses generally netted?
separately net short-term gains and losses and long-term gains and losses then net the short-term and long-term results against each other individuals may deduct up to $3,000 of net capital loss against ordinary income each year, with the excess carried forward