Question 1

Which of the following comparisons is correct?

Accepted Answer

A)  Both individual and corporate long-term capital losses carryover as short-term capital losses. 
B)  Individuals may only carry forward capital losses for five years; corporations may carry forward capital losses indefinitely; 
C)  Both individuals and corporations may use the 15% tax rate on net capital gains. 
D)  Corporations may carry back capital losses; individuals may not. 
A)  Both individual and corporate long-term capital losses carryover as short-term capital losses. 
B)  Individuals may only carry forward capital losses for five years; corporations may carry forward capital losses indefinitely; 
C)  Both individuals and corporations may use the 15% tax rate on net capital gains. 
D)  Corporations may carry back capital losses; individuals may not.

Question 2

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. How much of Lopez Corporation's realized gain on the sale will be a net Section 1231 gain?

Accepted Answer

A)  $30,000 
B)  $142,500 
C)  $212,500 
D)  $187,500 
A)  $30,000 
B)  $142,500 
C)  $212,500 
D)  $187,500

Question 3

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

Accepted Answer

A)  100 shares of Bilco stock bought for $8,000 on January 22 of year 3 and sold for $10,000 on January 22 of year 4. 
B)  20 acres of investment land bought for $8,000 on January 31 of year 3 and sold for $7,000 on February 2 of year 4. 
C)  150 shares of Data stock bought for $15,000 on April 1 of year 2 and sold for $17,000 on May 28 of year 4. 
A)  100 shares of Bilco stock bought for $8,000 on January 22 of year 3 and sold for $10,000 on January 22 of year 4. 
B)  20 acres of investment land bought for $8,000 on January 31 of year 3 and sold for $7,000 on February 2 of year 4. 
C)  150 shares of Data stock bought for $15,000 on April 1 of year 2 and sold for $17,000 on May 28 of year 4.

Question 4

To determine the tax, a taxpayer with a $5,000 gain on the sale of a collectible and a $10,000 gain on the sale of stock, adds the gain on the stock to income after the gain on the collectible.

Accepted Answer

A) True 
 B)False

Question 5

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.
-Loss on the sale of equipment used in a business for three years.

Accepted Answer

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

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 personal residence.

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 a building used for 15 years by a corporation.

Accepted Answer

Section 12

Question 8

Caldwell Corporation sold a factory building for $300,000 that it originally purchased for $600,000. It had an adjusted basis of $200,000 due to having taken $400,000 of depreciation. What is Caldwell's Section 1231 gain on the sale of the property?

Accepted Answer

A)  $400,000 
B)  $300,000 
C)  $100,000 
D)  $80,000 
A)  $400,000 
B)  $300,000 
C)  $100,000 
D)  $80,000

Question 9

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.
-Loss on the factoring of receivables.

Accepted Answer

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

Question 10

Why is the character of a gain or loss on a disposition important? What are the three types of recognized gains or losses that determine their taxation?

Accepted Answer

The character of a gain or los

Question 11

Tina is single and one of the founding shareholders of Exacta Corporation. She acquired her Exacta Section 1244 stock four years ago for $123,000. During the current year, Tina sold all of her Exacta stock to an unrelated party for $40,000. Tina had no other capital gains or losses during the year. What is the maximum amount of loss Tina can deduct in the current year for the Exacta stock?

Accepted Answer

A)  $83,000 
B)  $53,000 
C)  $50,000 
D)  $3,000 
A)  $83,000 
B)  $53,000 
C)  $50,000 
D)  $3,000

Question 12

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.
-Noah sold investment land for $70,000 cash and the buyer's assumption of Noah's $30,000 mortgage on the property. Noah paid a realtor's commission of $2,800 on the sale. What is Noah's realized gain if the land has an adjusted basis of $57,000?

Accepted Answer

A)  $43,000 
B)  $40,200 
C)  $13,000 
D)  $10,200 
A)  $43,000 
B)  $40,200 
C)  $13,000 
D)  $10,200

Question 13

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.
-Loss on the sale of municipal bonds by a corporation.

Accepted Answer

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

Question 14

What is Section 291 recapture?

Accepted Answer

Section 291 recapture requires corporate

Question 15

Margo purchased 2,000 shares of qualifying Section 1202 stock six years ago for $200,000. In the current year, she sold the stock for $2,000,000. How much gain can she exclude from her income?

Accepted Answer

A)  $2,000,000 
B)  $1,800,000 
C)  $900,000 
D)  $200,000 
A)  $2,000,000 
B)  $1,800,000 
C)  $900,000 
D)  $200,000

Question 16

Section 291 recapture only applies to a corporation.

Accepted Answer

A) True 
 B)False

Which of the following comparisons is correct?

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

To determine the tax, a taxpayer with a $5,000 gain on the sale of a collectible and a $10,000 gain on the sale of stock, adds the gain on the stock to income after the gain on the collectible.

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. -Loss on the sale of equipment used in a business for three years.

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 personal residence.

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 building used for 15 years by a corporation.

Caldwell Corporation sold a factory building for $300,000 that it originally purchased for $600,000. It had an adjusted basis of $200,000 due to having taken $400,000 of depreciation. What is Caldwell's Section 1231 gain on the sale of the property?

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. -Loss on the factoring of receivables.

Why is the character of a gain or loss on a disposition important? What are the three types of recognized gains or losses that determine their taxation?

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. -Loss on the sale of municipal bonds by a corporation.

What is Section 291 recapture?

Margo purchased 2,000 shares of qualifying Section 1202 stock six years ago for $200,000. In the current year, she sold the stock for $2,000,000. How much gain can she exclude from her income?

Section 291 recapture only applies to a corporation.

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

Which of the following comparisons is correct?

Determine the amount of the capital gain or loss in each of the following transactions and state whether the gain or loss is long-term or short-term.

To determine the tax, a taxpayer with a $5,000 gain on the sale of a collectible and a $10,000 gain on the sale of stock, adds the gain on the stock to income after the gain on the collectible.

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. -Loss on the sale of equipment used in a business for three years.

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 personal residence.

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 building used for 15 years by a corporation.

Caldwell Corporation sold a factory building for $300,000 that it originally purchased for $600,000. It had an adjusted basis of $200,000 due to having taken $400,000 of depreciation. What is Caldwell's Section 1231 gain on the sale of the property?

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. -Loss on the factoring of receivables.

Why is the character of a gain or loss on a disposition important? What are the three types of recognized gains or losses that determine their taxation?

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. -Loss on the sale of municipal bonds by a corporation.

What is Section 291 recapture?

Margo purchased 2,000 shares of qualifying Section 1202 stock six years ago for $200,000. In the current year, she sold the stock for $2,000,000. How much gain can she exclude from her income?

Section 291 recapture only applies to a corporation.

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