Exam 8: Capital Gains and Losses

Simonne, a single taxpayer, bought her home in La Jolla 25 years ago for $55,000. She has lived continuously in the home since she purchased it. In the current year, she sells her home for $405,000. What is Simonne's taxable gain on the sale?

Rod had the following personal casualty in 2015: ​ ​ ​ ​ Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

Nick received a gift of stock from his father. Nick's father had purchased the stock 2 years earlier and his father's basis in the stock was $30,000. On the date of the gift, the stock had a fair market value of $25,000. a.If Nick sells the stock for $33,000, calculate the amount of Nick's gain or loss on the transaction. b.If Nick sells the stock for $22,000, calculate the amount of Nick's gain or loss on the transaction. c.If Nick sells the stock for $27,000, calculate the amount of Nick's gain or loss on the transaction.

Which of the following assets is not a Section 1231 asset?

The following are owned by Robert. Indicate which are capital assets. ​ a.Rental property at 123 Main Street ______ b.Tables and chairs sold in his furniture business ______ c.The cash register used in his furniture business ______ d.A 1972 Porsche 916 ______ e.The rights to Taylor Swift's song, "Blank Space" ______

The first day a capital asset acquired on August 31, 2015 may be sold for long-term capital gain or loss treatment is September 1, 2015.

Verlin sells a commercial building and receives $50,000 in cash and a note for $60,000 at 10 percent interest. Verlin's adjusted basis in the building on the date of sale is $45,000 and he collects only the $50,000 down payment in the year of the sale. a.​ If Verlin elects to recognize the total gain on the property in the year of sale, calculate the taxable gain. b.​ Assuming Verlin uses the installment sale method, calculate the taxable gain he must report for the year of the sale. c.​ ​ Assuming Verlin collects $10,000 (not including interest) of the note principal in the year following the year of sale, calculate the amount of income recognized under the installment sale method.

Stewart, age 44, sells his personal residence of 4 years on June 14, 2015, for $190,000. The expenses of sale are $15,000 and he has paid for capital improvements of $3,000. Stewart purchased the residence for $100,000. On February 2, 2016, Stewart purchases and occupies a new residence at a cost of $200,000. a.Calculate the gain realized on the sale of Stewart's residence. b.How much gain must be recognized on the sale of Stewart's residence? c.Calculate Stewart's basis in the new residence.

Sol purchased land as an investment on January 12, 2010, for $85,000. On January 31, 2015, Sol sold the land for $25,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount realized (not gain realized) on the sale of the land?

In the current year, Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago. Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000. How much of the gain is taxable as ordinary income?

Ben purchased an apartment building about 10 years ago, for $200,000. The building has been depreciated over the appropriate recovery period using the straight-line method. In the current year, the building was sold for $220,000, when the accumulated depreciation was $62,500. Ben is in the highest tax bracket; on his current year tax return, he should report:

If a capital asset acquired on October 27, 2007 is sold on April 30, 2015 for a gain, the gain is a long-term capital gain.

Sol purchased land as an investment on January 12, 2010 for $85,000. On January 31, 2015, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Assuming a taxpayer has no other gains or losses for the year, a loss from the theft of a Section 1231 asset is treated as a capital loss.

Accounts receivable are capital assets.

Emily sold the following investments during the year: For each stock, calculate the amount and the nature of the gain or loss.

During the current year, Ethel exchanges a machine for another machine in a like-kind exchange. Ethel's adjusted basis in the machine given up is $7,000, and she receives a machine worth $13,000 plus $3,000 cash. a.Calculate the amount of gain realized by Ethel on the exchange. b.Calculate the amount of the gain that must be recognized by Ethel on the transaction. c.Calculate Ethel's basis in the new machine.

Taxpayers are allowed to offset net short-term capital losses with net long-term capital gains.

Perry acquired raw land as an investment 16 years ago. The land cost $60,000. In the current year, the land is sold for a total sales price of $120,000, consisting of $10,000 cash and the buyer's note for $110,000. If Perry elects to recognize the entire gain in the year of sale, what is his recognized gain in the current year?

Tim sells land to Brad for $90,000. Tim originally purchased the land for $50,000. Brad agrees to pay Tim six annual installments of $15,000 each. In year three, Brad makes his third installment of $15,000. How much taxable gain will Tim recognize in year three?