Question: Paris Corporation holds a 100 000 unrealized net capital gain

Paris Corporation holds a $ 100,000 unrealized net capital gain and a capital loss carryforward that will expire in the current year. Paris is subject to a 14 percent cost of capital. Its marginal tax rate is 40 percent. Should Paris accelerate the recognition of this gain from next year to this year, assuming a net capital loss carryforward in each of the following amounts?
a. $ 40,000
b. $ 10,000
c. Repeat the computation using the amounts in parts a. and b., but this time assume that Paris is subject to a 6 percent cost of capital.

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  • CreatedOctober 30, 2015
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