Taylor Corporation sold Division M (a business component). It was determined that the pretax loss from the operations of Division M during the year totaled $50,000 and that a pretax gain of $150,000 was realized on the sale of the division. The tax rate is 32%. Required: Complete the appropriate section of the income statement related to this information. Taylor Corporation Partial Income Statement Results from discontinued operations: Loss from operations of discontinued Division M Gain on disposal of Division M

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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.