Exam 8: Property Dispositions

The Walford Partnership (owned by two individuals) sold an apartment building for $300,000 that it purchased for $280,000 ten years ago. The partnership took $80,000 of depreciation deductions on the building. What is the amount and type of gain realized by the partnership on the sale and taxed to the individual partners?

Shawn, a single taxpayer, sold the house he lived in for seven years for $700,000. He purchased the house for $285,000. He made improvements at a cost of $125,000 and paid a $30,000 commission on the sale. What are Shawn's realized and recognized gains on the sale?

What is the difference between a realized gain or loss and a recognized gain or loss?

A personal residence owned by an individual is a capital asset.

Vanessa bought 2,000 shares of Glenco stock when the company was first formed for $57,000. The company had $900,000 of total capital when formed and the stock qualified as Section 1244 stock. Vanessa sold the stock three years later for $3,000. If Vanessa is single, how much gain or loss does she have on the sale of the stock and how will it be treated by her?

Nancy sold her Section 1202 stock for $9,000,000 on August 7, 2017. She had purchased the stock nine years ago for $1,500,000. She invested $4,500,000 in other qualifying Section 1202 stock. How will Nancy treat the gain on this sale for tax purposes? How would your answer change if the stock is instead sold in 2018?

Ginger sold stock that she had purchased five years ago for $15,000 to her brother, Carl, for $12,000. The next month, Carl sold the stock for $11,000. What is the amount and type of gain or loss included in Carl's income from this sale?

Carlos provides you with the following information for years 1 and 2, exclusive of capital loss carryovers: STCG STCL LTCG LTCL Year 1 0 $2,400 $400 $3,500 Year 2 $500 $ 700 $900 $1,000 Determine the amount and type of capital loss deduction each year, if any, and the carryover to the following year.

Bill is single with taxable income of $95,000 and in the 24 percent tax bracket in 2018. During the year, he sold some stock held for 11 months at a $500 gain, gold coins held for two years at a $1,900 loss, antique toys held three years at a $2,200 gain, bonds held for two years for $400 gain, and some investment land held six months at a $300 loss. Determine Bill's net capital gain or loss and detail how it will be treated for tax purposes.

The most common ordinary income assets are receivables and inventory.

Which of the following is correct?

What is the effect of the Section 1231 look-back rules?

Paul has a $45,000 net Section 1231 gain in the current tax year from his only property transaction. Last year he had a $12,000 net Section 1231 gain, but two years ago he had a $51,000 net Section 1231 loss. If he has no other property transactions in the current year, how will Paul treat his net Section 1231 gains this year?

Angel sells the following depreciable assets from her sole proprietorship: Asset Cost Age Gain/Loss Office furniture $10,000 4 years ($2,400) Truck $20,000 5 years 3,100 Bakery equipment $25,000 9 months (4,500) What should Angel report on her income tax return relative to each of these property transactions?

During the current year, Mrs. Mayhew received a used computer as a gift from her son for her personal use. The computer has a current fair market value of $350 and cost her son $850. He took $400 of depreciation deductions while it was used in his business. Mrs. Mayhew uses the computer for several years and then sells it for $200. What is the amount and type of gain or loss that Mrs. Mayhew recognizes on the sale?

An individual taxpayer has the following property transactions during the current year: Personal automobile owned 3 years $4,000 loss on sale Business equipment owned 3 years $5,600 gain on sale Factoring of receivables $6,200 loss Common stock owned 7 months $3,500 gain on sale How do these transactions affect the individual's AGI?

Cliff owned investment stock purchased three years ago for $16,000 and bonds purchased six months ago for $9,800. When he needed money recently, he sold the stock for $13,800 and the bonds for $10,100. What is the amount and type of net gain or loss that Cliff will include in computing his taxable income?

Brent sold his personal car and some household furniture during the year. He had a $3,000 gain on the car but a $5,000 loss on the furniture. What is his recognized gain or loss included in taxable income as a result of these sales?

Bobsy Company has a $14,000 net Section 1231 gain for the current tax year from its only property transaction. In the previous year, it had a $7,000 net Section 1231 loss. For the current year, the net Section 1231 gain will be taxed as:

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 $6,000 Long-term capital loss 20,000 Section 1231 gain 8,000 Section 1231 loss 5,000 Short-term capital gain 23,000 Short-term capital loss 6,000