Question 1

Which of the following is true about capital gains?

Accepted Answer

A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2015, long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above. 
A) Short-term capital gains are not netted with other capital gains and losses. 
B) For 2015, long-term capital gains are subject to special tax treatment. 
C) Long-term capital gains are never taxed. 
D) Net short-term capital gains are not netted with net long-term capital losses. 
E) None of the above.

Question 2

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's taxable gain and what is the basis in the new building?

Accepted Answer

A) $260,000; $500,000 
B) $200,000; $300,000 
C) $60,000; $300,000 
D) $260,000; $300,000 
E) $60,000; $500,000 
A) $260,000; $500,000 
B) $200,000; $300,000 
C) $60,000; $300,000 
D) $260,000; $300,000 
E) $60,000; $500,000

Question 3

Carlos bought a building for $113,000 in 2011. He added an addition to the building for $26,000. In 2015, he sold it for $212,000. What was his long-term capital gain?

Accepted Answer

A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000 
A) $0 
B) $47,000 
C) $73,000 
D) $99,000 
E) $212,000

Question 4

Bev owns an apartment complex she purchased 10 years ago for $480,000 with a $80,000 cash down payment accompanied by a $400,000 loan. Bev has made $70,000 of capital improvements on the complex and her depreciation claimed on the building to date is $100,000. Calculate Bev's adjusted basis in the building.

Accepted Answer

$450,000 =

Question 5

Which of the following statements is correct with respect to the deferral provisions of the tax law?

Accepted Answer

A) The like-kind exchange provision is elective. 
B) The involuntary conversion provision is elective. 
C) The exclusion of gain on the sale of a personal residence is elective. 
D) Both the like-kind exchange and the involuntary conversion provisions are elective. 
E) None of the above. 
A) The like-kind exchange provision is elective. 
B) The involuntary conversion provision is elective. 
C) The exclusion of gain on the sale of a personal residence is elective. 
D) Both the like-kind exchange and the involuntary conversion provisions are elective. 
E) None of the above.

Question 6

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

Accepted Answer

A) True 
 B)False

Question 7

Casualty gains and losses from business or investment property:

Accepted Answer

A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions. 
A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions.

Question 8

Robert and Becca are in the 25 percent tax bracket. They have a long-term capital gain of $28,000 and a long-term capital loss of $17,000 on sales of stock in the current year. What will their capital gains tax be in the current year?

Accepted Answer

A) $1,650 
B) $2,200 
C) $2,750 
D) $11,000 
E) None of the above is correct 
A) $1,650 
B) $2,200 
C) $2,750 
D) $11,000 
E) None of the above is correct

Question 9

The adjusted basis of an asset may be determined by the:

Accepted Answer

A) Selling price + gain realized. 
B) Selling price - gain realized. 
C) Selling price + capital improvements - accumulated depreciation. 
D) Original basis + capital improvements - selling price. 
E) None of the above. 
A) Selling price + gain realized. 
B) Selling price - gain realized. 
C) Selling price + capital improvements - accumulated depreciation. 
D) Original basis + capital improvements - selling price. 
E) None of the above.

Question 10

A taxpayer's personal automobile is a capital asset.

Accepted Answer

A) True 
 B)False

Question 11

Dan acquired rental property in June 2005 for $370,000 and sold it in October, 2015. $40,000 in straight-line depreciation has been taken on the house. A run-up in housing prices in San Diego allowed him to sell the house for $575,000. In the year of sale, Dan received $175,000 when the buyer sold some investments, an additional $200,000 when the buyer closed a loan from the bank, and took a $200,000 note from the buyer, payable on the anniversary of the sale date in 10 installments of $20,000 each plus interest on the unpaid balance.
​
Using the installment method, calculate his taxable gain in the year of sale.

Accepted Answer

$575,000 - ($370,000 - $40,000) = $245,0

Question 12

During 2015, William sold the following capital assets:
Calculate the following:
a.Total short-term capital gain/loss realized for tax purposes
b.Total long-term capital gain/loss realized for tax purposes
c.Deductible capital gain/loss
d.The amount and nature (short-term or long-term) of his capital loss carryforward
e.Assuming that William has no capital gain or loss for 2016, how much can he deduct in 2016 and what is the amount and nature of any carryforward to 2017?

Accepted Answer

a. $5,000 short-term loss ($2,000 - $7,0

Question 13

Which of the following is a capital asset?

Accepted Answer

A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above 
A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above

Question 14

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

Accepted Answer

A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above 
A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above

Question 15

Rod had the following loss on business-use property:
​
​
​   ​
Calculate the amount and nature of Rod's gain or loss as a result of this casualty.
​

Accepted Answer

$200 loss. The loss is a Secti

Question 16

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

Accepted Answer

A) True 
 B)False

Question 17

What are capital assets?

Accepted Answer

A capital asset is any property whether

Question 18

If property is inherited by a taxpayer,

Accepted Answer

A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death. 
A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death.

Question 19

In the current year, Estes has net short-term capital losses of $3,000, a net long-term capital loss of $45,000, and taxable income from wages of $35,000.
a.Calculate the amount of Estes' deduction for capital losses for the current year.
b.Calculate the amount and nature (short-term or long-term) of his capital loss carryforward.
c.For how many years may Estes carry the unused loss forward?

Accepted Answer

The answer of In the current year, Estes has net...

Question 20

The basis of property received as an inheritance is generally equal to the fair market value at the date of death.

Accepted Answer

A) True 
 B)False

Which of the following is true about capital gains?

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's taxable gain and what is the basis in the new building?

Carlos bought a building for $113,000 in 2011. He added an addition to the building for $26,000. In 2015, he sold it for $212,000. What was his long-term capital gain?

Which of the following statements is correct with respect to the deferral provisions of the tax law?

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

Casualty gains and losses from business or investment property:

Robert and Becca are in the 25 percent tax bracket. They have a long-term capital gain of $28,000 and a long-term capital loss of $17,000 on sales of stock in the current year. What will their capital gains tax be in the current year?

The adjusted basis of an asset may be determined by the:

A taxpayer's personal automobile is a capital asset.

Which of the following is a capital asset?

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

Rod had the following loss on business-use property: Calculate the amount and nature of Rod's gain or loss as a result of this casualty.

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

What are capital assets?

If property is inherited by a taxpayer,

The basis of property received as an inheritance is generally equal to the fair market value at the date of death.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 8: Capital Gains and Losses

Which of the following is true about capital gains?

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's taxable gain and what is the basis in the new building?

Carlos bought a building for $113,000 in 2011. He added an addition to the building for $26,000. In 2015, he sold it for $212,000. What was his long-term capital gain?

Which of the following statements is correct with respect to the deferral provisions of the tax law?

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

Casualty gains and losses from business or investment property:

Robert and Becca are in the 25 percent tax bracket. They have a long-term capital gain of $28,000 and a long-term capital loss of $17,000 on sales of stock in the current year. What will their capital gains tax be in the current year?

The adjusted basis of an asset may be determined by the:

A taxpayer's personal automobile is a capital asset.

Which of the following is a capital asset?

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

Rod had the following loss on business-use property: ​ ​ ​ ​ Calculate the amount and nature of Rod's gain or loss as a result of this casualty. ​

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

What are capital assets?

If property is inherited by a taxpayer,

The basis of property received as an inheritance is generally equal to the fair market value at the date of death.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Rod had the following loss on business-use property: Calculate the amount and nature of Rod's gain or loss as a result of this casualty.