Exam 8: Property Dispositions

What are three types of dispositions other than a sale? Briefly explain each.

Melody works in her home using a computer she purchased two years ago for $2,500. The total adjusted basis for the computer is now $1,000. Her husband and children used the computer 20 percent of the time to play computer games and for personal correspondence. She sells the computer for $1,200. How much and what kind of gain does Melody recognize?

What are the carryover provisions for unused capital losses applicable to individuals?

William purchased his personal residence in 2011 for $285,000. In early 2017, he lost his job and was unable to make payments on the mortgage. In December 2017, William worked out a new repayment schedule with his bank after he obtained a new job that reduced his mortgage from $235,000 to $120,000. Which of the following statements is true regarding this mortgage reduction?

Abby has a $10,000 loss on some collectibles, a $5,000 Sec. 1202 gain, and an $11,000 gain on some securities. If all gains and losses are long-term and Abby is in the 24 percent tax bracket, how is her net gain taxed?

Which of the following is a capital asset?

Becky bought a home with her husband, Ken, in 2004 for $125,000. They were divorced in 2013 and Becky became sole owner of the home under the divorce decree. On January 5, 2017, Becky married Michael. Michael and Becky have been living in the house since their marriage but they are planning now to move. If Michael and Becky sell their home on December 15, 2018 for $500,000, how much taxable gain must they report on their 2018 joint tax return?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -A business sells a machine used in its business for $18,000. It had purchased the machine 10 months earlier for $26,000. What is the amount and type of the $8,000 loss on the sale of the asset?

On January 4, 2018, Courtney gave his son, Brian, stock valued at $10,000 that he had purchased three years earlier for $16,000. Later in the year, Brian sold the stock for $11,000. What is the amount and type of gain or loss that Brian will report on this sale?

Janeway Corporation has ordinary taxable income of $127,000 in 2018 before consideration of any of the following property transactions. It sold two blocks of stocks held for investment: one yielded a short-term capital gain of $8,000 and the other a long-term capital loss of $14,000. In addition, it sold four pieces of machinery used for three years for $30,000. The machines had cost $50,000 originally and had $35,000 of depreciation deductions taken. They also sold a building for $400,000 that they had purchased in 2000 for $390,000. The depreciation deductions up to the date of sale were $89,000. Determine the amount and type of the net gains and losses from the property transactions and Janeway Corporation's taxable income for 2018.

Taxpayer B has the following gains and losses from property transactions. What is the effect on the taxpayer's taxable income if Taxpayer B is (a) a corporation; (b) an individual? Long-term capital gain $4,000 Long-term capital loss 7,000 Section 1231 gain 10,000 Section 1231 loss 6,000 Short-term capital gain 3,000 Short-term capital loss 6,000

Corporate net capital gains receive no tax-favored treatment.

When does an asset have a substituted basis?

The holding period for an asset acquired by inheritance is determined by including the period the asset was held by the decedent.

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Gain on the sale of a machine used by a business for four years sold at a price less than its original cost.

Alpha Corporation had income from operations of $30,000. What is the corporation's taxable income including the following property transactions: Gain on investment stock held for two years = $8,000; loss on machinery held three years = $6,000; $4,000 loss on equipment held 10 months; $4,000 gain on land used for six years for storage of trucks.

Vero Corporation owns $200,000 of equipment used for its business and the building that the business is located in that is valued at $175,000. The business is successful and has investments in marketable securities valued at $45,000. What is the value of its capital assets?

Identify the type(s) of gain or loss that would be recognized on the following asset sales as capital, Section 1231, ordinary, Section 1245 recapture, Section 291 recapture, or Section 1250 unrecaptured gain. -Emma sold her home for $60,000 cash and the buyer's assumption of her mortgage of $210,000. Emma paid closing costs of $2,900 and a broker's commission of $13,000. What is the amount Emma realized on the sale?

Quidik Corporation sold a machine for $80,000 that it had acquired three years ago for $68,000. If its adjusted basis when sold was $50,000, what should Quidik report on its tax return as a result of this sale?

A corporation sells a machine used in its business for 9 years for $22,000. The machine originally cost $120,000 and was fully depreciated. Its gain will be treated as: