3.

Which of the following is a capital asset?

a. property held primarily for sales to customers b.accounts or notes receivable acquired in the ordinary course of business

c. machinery and equipment used in a trade of business

d. temporary investment of idle business cash in marketable corporate securities

e. real property used in a trade or business

4. Valerie Villane incurred the following gains and losses during 2016:

Loss resulting from theft of a diamond ring held two years ($1,000)

Loss on the sale of a typewriter used in her business for five years ($250)

Gain on the sale of an adding machine used in her business for two years (in addition to recapture) $500

What is Valeries net Section 1231 gain or loss for 2016?

a. $750 loss

b. $1,250 loss

c. $0

d. $250 gain