Michael is in the business of creating posters (display art) for the movie industry. He creates a poster and sells it for a lump sum. He has:
A) Sold a capital asset.
B) Sold an ordinary asset.
C) No gain or loss.
D) An ordinary gain.
E) b. and d.

Question

Quizplus · Accepted Answer

Michael has sold an ordinary asset and realized an ordinary gain because the posters are inventory in his business, not capital assets.

Michael Is in the Business of Creating Posters (Display Art)