formation for Hobson Corporation for the current year ($ in millions): Income from continuing operations before tax $ 155 Loss on discontinued operation (pretax) 32 Temporary differences (all related to operating income):   Accrued warranty expense in excess of expense included in operating income 10 Depreciation deducted on tax return in excess of depreciation expense 25 Permanent differences (all related to operating income):   Nondeductible portion of entertainment expense 5 The applicable enacted tax rate for all periods is 25%. What should Hobson report as income from continuing operations?

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.