Question 1

What are the basic long-term capital gain tax rates and to which asset gains do they apply?

Accepted Answer

There are now four different basic tax r

Question 2

A taxpayer's initial investment in Section 1202 stock is limited to $1 million.

Accepted Answer

A) True 
 B)False

Question 3

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.
-Mason received $20,000 cash and equipment worth $10,000 in exchange for land that was encumbered by an $80,000 mortgage that the buyer assumed. Mason's basis for the land is $90,000. What is Mason's realized gain or loss on the sale?

Accepted Answer

A)  $20,000 realized gain 
B)  $10,000 realized gain 
C)  $10,000 realized loss 
D)  no realized gain or loss 
A)  $20,000 realized gain 
B)  $10,000 realized gain 
C)  $10,000 realized loss 
D)  no realized gain or loss

Question 4

Kelly, a single individual, has $15,000 of taxable income before a long-term capital gain of $5,000 on the sale of some stock owned for two years that she sold in 2018. What is the tax rate applied to this gain?

Accepted Answer

A)  0 percent 
B)  10 percent 
C)  15 percent 
D)  20 percent 
A)  0 percent 
B)  10 percent 
C)  15 percent 
D)  20 percent

Question 5

During the current tax year, the Jeckel Company has the following gains and losses from property transactions: $12,000 Section 1231 gain
$23,000 long-term capital gain
$21,000 Section 1231 loss
$4,000 Section 1231 gain
What is the amount and type of gain or loss reported by Jeckel for the year?

Accepted Answer

A)  $21,000 Section 1231 loss; $39,000 capital gain 
B)  $16,000 Section 1231 gain; $21,000 Section 1231 loss; $23,000 capital gain 
C)  $18,000 net capital loss 
D)  $5,000 net Section 1231 loss; $23,000 capital gain 
A)  $21,000 Section 1231 loss; $39,000 capital gain 
B)  $16,000 Section 1231 gain; $21,000 Section 1231 loss; $23,000 capital gain 
C)  $18,000 net capital loss 
D)  $5,000 net Section 1231 loss; $23,000 capital gain

Question 6

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 11 months.

Accepted Answer

The answer of Identify the type(s) of gain or loss...

Question 7

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 stock by an individual.

Accepted Answer

The answer of Identify the type(s) of gain or loss...

Question 8

What is depreciation recapture?

Accepted Answer

Depreciation recapture is the requiremen

Question 9

Kevin owns a rental apartment building that he purchased several years ago for $100,000. He has claimed accumulated depreciation of $60,000 on this building. In 2018 he sells the building for $110,000. If Kevin is in the 32% marginal tax bracket and has no other property transactions this year, what tax rate or rates apply to his gain from the sale of this building?

Accepted Answer

A)  32% and 25% 
B)  32% and 15% 
C)  25% and 15% 
D)  15% only 
A)  32% and 25% 
B)  32% and 15% 
C)  25% and 15% 
D)  15% only

Question 10

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

Accepted Answer

A)  This provision allows 50% of the gain from sale of any residence to be excluded from income. 
B)  A vacation home used as a residence for at least five months of the year will qualify for this exclusion. 
C)  It is possible for taxpayers to sell their home and qualify for this exclusion every two years. 
D)  The gain on the sale can be deferred and rolled over into another residence instead of electing the exclusion. 
A)  This provision allows 50% of the gain from sale of any residence to be excluded from income. 
B)  A vacation home used as a residence for at least five months of the year will qualify for this exclusion. 
C)  It is possible for taxpayers to sell their home and qualify for this exclusion every two years. 
D)  The gain on the sale can be deferred and rolled over into another residence instead of electing the exclusion.

Question 11

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.
-Lopez Corporation sold equipment that it had purchased for $300,000 ($100,000 cash and a note for $200,000) four years ago. As of the date of sale, Lopez had claimed $187,500 in accumulated depreciation on this equipment and had made $50,000 in principal payments on the note. Lopez received $80,000 cash and a note for $100,000 in addition to the purchaser assuming Lopez's $150,000 note on the equipment. What is the amount realized by Lopez Corporation on this sale?

Accepted Answer

A)  $80,000 
B)  $180,000 
C)  $300,000 
D)  $330,000 
A)  $80,000 
B)  $180,000 
C)  $300,000 
D)  $330,000

Question 12

All losses on Section 1244 stock are deductible in the year realized.

Accepted Answer

A) True 
 B)False

Question 13

In 2018, Isabella sold several shares of different stocks held for investment. The following is a summary of her capital transactions for the year:   What is the amount of Isabella's net capital gains or losses for 2018?

Accepted Answer

A)  $1,300 long-term capital gain 
B)  $850 long-term capital gain and $450 short-term capital gain 
C)  $1,050 long-term capital loss and $250 short-term capital loss 
D)  $1,050 long-term capital gain and $250 short-term capital gain 
A)  $1,300 long-term capital gain 
B)  $850 long-term capital gain and $450 short-term capital gain 
C)  $1,050 long-term capital loss and $250 short-term capital loss 
D)  $1,050 long-term capital gain and $250 short-term capital gain

Question 14

The Section 1231 look-back rules change the character of capital losses incurred in the
previous 5 years.

Accepted Answer

A) True 
 B)False

Question 15

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.
-Grill Corporation sold all of its business assets when it went out of business. Which of the following is a capital asset?

Accepted Answer

A)  Inventory 
B)  Office equipment 
C)  Goodwill 
D)  Factory machinery 
A)  Inventory 
B)  Office equipment 
C)  Goodwill 
D)  Factory machinery

Question 16

Gain representing depreciation recapture on equipment is taxed at ordinary income rates.

Accepted Answer

A) True 
 B)False

Question 17

Liam used his auto 70 percent for business and 30 percent for personal use. He purchased it for $15,000 and has taken $5,460 of depreciation on it. What is his recognized gain on a sale for $12,000 and what is its character?

Accepted Answer

A)  $2,940 Section 1231 gain 
B)  $3,360 Section 1245 ordinary income 
C)  $5,460 Section 1245 ordinary income 
D)  $6,540 Section 1231 gain 
A)  $2,940 Section 1231 gain 
B)  $3,360 Section 1245 ordinary income 
C)  $5,460 Section 1245 ordinary income 
D)  $6,540 Section 1231 gain

Question 18

What are the basic differences between Section 1245 and Section 1250 depreciation recapture?

Accepted Answer

In general, Section 1245 depreciation re

Question 19

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.
-The following properties have been owned by a business for more than one year. Which of them would not qualify for Section 1231 treatment on its disposal?

Accepted Answer

A)  Property held for rental income 
B)  Leasehold improvements 
C)  Stock held in inventory 
D)  Depreciable assets used in the business 
A)  Property held for rental income 
B)  Leasehold improvements 
C)  Stock held in inventory 
D)  Depreciable assets used in the business

Question 20

How are individual and corporate net capital losses treated?

Accepted Answer

Individuals are permitted to deduct only

What are the basic long-term capital gain tax rates and to which asset gains do they apply?

A taxpayer's initial investment in Section 1202 stock is limited to $1 million.

Kelly, a single individual, has $15,000 of taxable income before a long-term capital gain of $5,000 on the sale of some stock owned for two years that she sold in 2018. What is the tax rate applied to this gain?

During the current tax year, the Jeckel Company has the following gains and losses from property transactions: $12,000 Section 1231 gain $23,000 long-term capital gain $21,000 Section 1231 loss $4,000 Section 1231 gain What is the amount and type of gain or loss reported by Jeckel for the year?

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 11 months.

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 stock by an individual.

What is depreciation recapture?

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

All losses on Section 1244 stock are deductible in the year realized.

In 2018, Isabella sold several shares of different stocks held for investment. The following is a summary of her capital transactions for the year: What is the amount of Isabella's net capital gains or losses for 2018?

The Section 1231 look-back rules change the character of capital losses incurred in the previous 5 years.

Gain representing depreciation recapture on equipment is taxed at ordinary income rates.

Liam used his auto 70 percent for business and 30 percent for personal use. He purchased it for $15,000 and has taken $5,460 of depreciation on it. What is his recognized gain on a sale for $12,000 and what is its character?

What are the basic differences between Section 1245 and Section 1250 depreciation recapture?

How are individual and corporate net capital losses treated?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 8: Property Dispositions

What are the basic long-term capital gain tax rates and to which asset gains do they apply?

A taxpayer's initial investment in Section 1202 stock is limited to $1 million.

Kelly, a single individual, has $15,000 of taxable income before a long-term capital gain of $5,000 on the sale of some stock owned for two years that she sold in 2018. What is the tax rate applied to this gain?

During the current tax year, the Jeckel Company has the following gains and losses from property transactions: $12,000 Section 1231 gain $23,000 long-term capital gain $21,000 Section 1231 loss $4,000 Section 1231 gain What is the amount and type of gain or loss reported by Jeckel for the year?

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 11 months.

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 stock by an individual.

What is depreciation recapture?

Which of the following statements concerning the exclusion available under Section 121 for the sale of a personal residence is correct?

All losses on Section 1244 stock are deductible in the year realized.

In 2018, Isabella sold several shares of different stocks held for investment. The following is a summary of her capital transactions for the year: What is the amount of Isabella's net capital gains or losses for 2018?

The Section 1231 look-back rules change the character of capital losses incurred in the previous 5 years.

Gain representing depreciation recapture on equipment is taxed at ordinary income rates.

Liam used his auto 70 percent for business and 30 percent for personal use. He purchased it for $15,000 and has taken $5,460 of depreciation on it. What is his recognized gain on a sale for $12,000 and what is its character?

What are the basic differences between Section 1245 and Section 1250 depreciation recapture?

How are individual and corporate net capital losses treated?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters