Question 1

If the proceeds from the sale of property will be collected over a period of more than one year,a taxpayer is required to use the installment method.

Accepted Answer

A) True 
 B)False

Question 2

Nick received a gift of stock from his father.Nick's father had purchased the stock 2 years earlier and his father's basis in the stock was $30,000.On the date of the gift,the stock had a fair market value of
$25,000.
a.If Nick sells the stock for $23,000,calculate the amount of Nick's gain or loss on the transaction.
b.If Nick sells the stock for $32,000,calculate the amount of Nick's gain or loss on the transaction.
c.If Nick sells the stock for $27,000,calculate the amount of Nick's gain or loss on the transaction.

Accepted Answer

a.$2,000 loss = $25,000 - 23,000.
b.$2,0

Question 3

If a taxpayer is relieved of a liability on the disposition of property,the amount of the liability should be included in the amount realized on the sale or other disposition.

Accepted Answer

A) True 
 B)False

Question 4

In January 2013,Keyaki Construction Company exchanged an old truck,which cost $54,000 and had accumulated depreciation of $18,000,for a new truck having a fair market value of $65,000.In connection with the exchange,Keyaki paid $35,000 in cash.What is the tax basis of the new truck?

Accepted Answer

A) $54,000 
B) $65,000 
C) $71,000 
D) $89,000 
E) None of the above 
A) $54,000 
B) $65,000 
C) $71,000 
D) $89,000 
E) None of the above

Question 5

On August 8,2013,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2013,he purchased a new residence for $80,000.For 2013,Sam should recognize a gain on the sale of his residence of:

Accepted Answer

A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above 
A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above

Question 6

Stewart,age 44,sells his personal residence of 4 years on June 14,2013,for $185,000.The expenses of sale are $15,000 and he has paid for capital improvements of $3,000.Stewart purchased the residence for
$100,000.On February 2,2014,Stewart purchases and occupies a new residence at a cost of $200,000.
a.Calculate the gain realized on the sale of Stewart's residence.
b.How much gain must be recognized on the sale of Stewart's residence?
c.Calculate Stewart's basis in the new residence.

Accepted Answer

a.$67,000 = $185,000 - $15,000

Question 7

In December,2013,Ben and Jeri married,filing jointly)have a long-term capital gain of $55,000 on the sale of stock held for 4 years.They have no other capital gains and losses for the year.After standard deduction and personal exemptions,their ordinary income for the year,before the capital gain,is $72,500,making their total income for the year $127,500,$72,500 + $55,000).In 2013,married taxpayers pay tax of $9,983 at 10 percent and 15 percent rates from the tax table)on the first $72,500 of ordinary taxable income and 25 percent on ordinary taxable income up to $146,400.What is their total tax liability?

Accepted Answer

A) $9,983 
B) $23,733 
C) $18,233 
D) $13,750 
A) $9,983 
B) $23,733 
C) $18,233 
D) $13,750

Question 8

An artist's painting is not a capital asset when held by the artist.

Accepted Answer

A) True 
 B)False

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

Which one of the following is a capital asset?

Accepted Answer

A) Accounts receivable 
B) Copyright held by the author 
C) Securities 
D) Inventories 
E) All of the above are capital assets 
A) Accounts receivable 
B) Copyright held by the author 
C) Securities 
D) Inventories 
E) All of the above are capital assets

Question 11

In November,2013,70 year-old Jeanette sells her personal residence of the last 40 years for $350,000.Jeanette's basis in her residence is $60,000.The expenses associated with the sale of her home total
$20,000.Jeanette decides to move in with her daughter rather than purchase a new residence.Calculate Jeanette's realized gain and recognized gain on the sale of her residence.
a.Realized gain
b.Recognized gain

Accepted Answer

a.$270,000 = $350,00

Question 12

If insurance proceeds exceed the taxpayer's basis in property destroyed by fire and the proceeds are not invested in similar property,the taxpayer may be required to recognize a gain.

Accepted Answer

A) True 
 B)False

Question 13

Russell purchased a house 1 year ago for $150,000 and,due to an employment-related move,sold the house this year for $200,000.What is Russell's taxable gain?

Accepted Answer

$0.The $250,000 exclusion is p

Question 14

For 2013,long-term capital gains are not afforded preferential tax treatment.

Accepted Answer

A) True 
 B)False

Question 15

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

Accepted Answer

A) $25,000 
B) $35,000 
C) $42,000 
D) $45,000 
E) None of the above 
A) $25,000 
B) $35,000 
C) $42,000 
D) $45,000 
E) None of the above

Question 16

If a taxpayer sells his personal residence and purchases a new residence,realized gain may be recognized.

Accepted Answer

A) True 
 B)False

Question 17

Simonne,a single taxpayer,bought her home in La Jolla 25 years ago for $45,000.She has lived continuously in the home since she purchased it.In December,2013,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

Accepted Answer

A) $0 
B) $360,000 
C) $235,000 
D) $110,000 
A) $0 
B) $360,000 
C) $235,000 
D) $110,000

Question 18

Sally acquired an apartment building in 1998 for $150,000 and sold it for $400,000 in 2013.At the time of the sale,there is $55,000 of accumulated straight-line depreciation on the apartment building.Assuming Sally is in the 35 percent tax bracket for ordinary income,how much of her gain is taxed at 15 percent?

Accepted Answer

A) None 
B) $55,000 
C) $250,000 
D) $305,000 
E) $400,000 
A) None 
B) $55,000 
C) $250,000 
D) $305,000 
E) $400,000

Question 19

In 2013,Marc,a single taxpayer,has ordinary income of $35,000.In addition,he has $3,000 in short- term capital gains,short-term capital losses of $6,000,and long-term capital gains of $4,000.What is Marc's adjusted gross income AGI)for 2013?

Accepted Answer

A) $32,000 
B) $39,000 
C) $36,000 
D) $34,000 
A) $32,000 
B) $39,000 
C) $36,000 
D) $34,000

Question 20

Which of the following statements is true?

Accepted Answer

A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true. 
A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true.

If the proceeds from the sale of property will be collected over a period of more than one year,a taxpayer is required to use the installment method.

If a taxpayer is relieved of a liability on the disposition of property,the amount of the liability should be included in the amount realized on the sale or other disposition.

In January 2013,Keyaki Construction Company exchanged an old truck,which cost $54,000 and had accumulated depreciation of $18,000,for a new truck having a fair market value of $65,000.In connection with the exchange,Keyaki paid $35,000 in cash.What is the tax basis of the new truck?

On August 8,2013,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2013,he purchased a new residence for $80,000.For 2013,Sam should recognize a gain on the sale of his residence of:

An artist's painting is not a capital asset when held by the artist.

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

Which one of the following is a capital asset?

If insurance proceeds exceed the taxpayer's basis in property destroyed by fire and the proceeds are not invested in similar property,the taxpayer may be required to recognize a gain.

Russell purchased a house 1 year ago for $150,000 and,due to an employment-related move,sold the house this year for $200,000.What is Russell's taxable gain?

For 2013,long-term capital gains are not afforded preferential tax treatment.

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

If a taxpayer sells his personal residence and purchases a new residence,realized gain may be recognized.

Simonne,a single taxpayer,bought her home in La Jolla 25 years ago for $45,000.She has lived continuously in the home since she purchased it.In December,2013,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

In 2013,Marc,a single taxpayer,has ordinary income of $35,000.In addition,he has $3,000 in short- term capital gains,short-term capital losses of $6,000,and long-term capital gains of $4,000.What is Marc's adjusted gross income AGI)for 2013?

Which of the following statements is true?

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

If the proceeds from the sale of property will be collected over a period of more than one year,a taxpayer is required to use the installment method.

If a taxpayer is relieved of a liability on the disposition of property,the amount of the liability should be included in the amount realized on the sale or other disposition.

In January 2013,Keyaki Construction Company exchanged an old truck,which cost $54,000 and had accumulated depreciation of $18,000,for a new truck having a fair market value of $65,000.In connection with the exchange,Keyaki paid $35,000 in cash.What is the tax basis of the new truck?

On August 8,2013,Sam,single,age 62,sold for $210,000 his principal residence,which he has lived in for 10 years,and which had an adjusted basis of $60,000.On November 1,2013,he purchased a new residence for $80,000.For 2013,Sam should recognize a gain on the sale of his residence of:

An artist's painting is not a capital asset when held by the artist.

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

Which one of the following is a capital asset?

If insurance proceeds exceed the taxpayer's basis in property destroyed by fire and the proceeds are not invested in similar property,the taxpayer may be required to recognize a gain.

Russell purchased a house 1 year ago for $150,000 and,due to an employment-related move,sold the house this year for $200,000.What is Russell's taxable gain?

For 2013,long-term capital gains are not afforded preferential tax treatment.

Martha has a net capital loss of $20,000 and other ordinary taxable income of $45,000 for the current tax year.What is the amount of Martha's taxable income after deducting the allowed capital loss?

If a taxpayer sells his personal residence and purchases a new residence,realized gain may be recognized.

Simonne,a single taxpayer,bought her home in La Jolla 25 years ago for $45,000.She has lived continuously in the home since she purchased it.In December,2013,she sells her home for $405,000.What is Simonne's taxable gain on the sale?

In 2013,Marc,a single taxpayer,has ordinary income of $35,000.In addition,he has $3,000 in short- term capital gains,short-term capital losses of $6,000,and long-term capital gains of $4,000.What is Marc's adjusted gross income AGI)for 2013?

Which of the following statements is true?

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