Question 1

A capital asset includes all the following except:

Accepted Answer

A)  A taxpayer's home. 
B)  Inherited property. 
C)  Real estate used in the taxpayer's trade or business. 
D)  Real estate held for investment. 
A)  A taxpayer's home. 
B)  Inherited property. 
C)  Real estate used in the taxpayer's trade or business. 
D)  Real estate held for investment.

Question 2

Anike received property as part of an inheritance from her father who passed away on March 10,2014.The property was purchased by her father on July 3,2013,for $146,000.Anike sold the property on June 30,2014,for $158,000.At the date of his death the property had a FMV of $144,000.What gain,if any,will Anike pick up on her return for 2014?

Accepted Answer

A)  no gain is recognized on the sale of property sold within 1 year of inheritance. 
B)  $3,000 long-term gain. 
C)  $14,000 short-term gain. 
D)  $14,000 long-term gain. 
A)  no gain is recognized on the sale of property sold within 1 year of inheritance. 
B)  $3,000 long-term gain. 
C)  $14,000 short-term gain. 
D)  $14,000 long-term gain.

Question 3

The amount realized from a sale or trade of property is the amount received for the asset minus the basis that will be recognized for tax purposes.

Accepted Answer

A) True 
 B)False

Question 4

In 2014,Carmen had a net capital loss of $10,000 and taxable income of $100,000.What is Carmen's loss carryforward to 2015?

Accepted Answer

A)  $0. 
B)  $3,000. 
C)  $5,000. 
D)  $7,000. 
A)  $0. 
B)  $3,000. 
C)  $5,000. 
D)  $7,000.

Question 5

Shanstella bought a 4-unit apartment building in July 2005 for $360,000 and sold it for $480,000 in 2014.There was $96,541 of accumulated straight-line depreciation on the apartment building.Assuming that Shanstella is in the 33% tax bracket,how much of her gain is taxed at 25%?

Accepted Answer

A)  $0. 
B)  $96,541. 
C)  $120,000. 
D)  $216,541. 
A)  $0. 
B)  $96,541. 
C)  $120,000. 
D)  $216,541.

Question 6

Any Section 1245 gain is recognized as "ordinary" to the extent of the depreciation taken.

Accepted Answer

A) True 
 B)False

Question 7

If land were an investment held in a trade or business,the gain or loss would be reported on Schedule

Accepted Answer

A) True 
 B)False

Question 8

In 2014,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock:   Assuming Daryl uses the single category average cost method,he will realize:

Accepted Answer

A)  $1,750.00 long-term loss. 
B)  $2,200.00 long-term loss. 
C)  $3,125.00 long-term loss. 
D)  $3,462.50 long-term loss. 
A)  $1,750.00 long-term loss. 
B)  $2,200.00 long-term loss. 
C)  $3,125.00 long-term loss. 
D)  $3,462.50 long-term loss.

Question 9

Anupay sold 900 shares of Stay-Rich Mutual fund for $85,600 in 2014.She purchased shares in the mutual fund in the following years.
2008 200 shares @ $105
2010 300 shares @ $100
2011 200 shares @ $110
2013 300 shares @ $88
2013 100 shares @ $95
(all 2013 shares are considered to be held for > 1 year)
a.Determine the amount of the gain or loss assuming Anupay uses the single category average cost method.
b.Assuming there are no other Schedule D transactions,how much of a gain or loss will Anupay recognize on her Form 1040 for 2014?
c.How much,if any of the gain or loss will be carried over to 2015?

Accepted Answer

a.($3,500)long term

Question 10

Greg sold some equipment for $72,510 on June 13,2014.Greg had originally purchased the equipment for $86,750 on November 21,2013.The equipment was subject to depreciation of $17,350.What gain or loss will Greg recognize on the sale?

Accepted Answer

A)  $3,110 ordinary gain. 
B)  $3,110 capital gain. 
C)  $8,250 capital loss. 
D)  $8,250 ordinary loss. 
A)  $3,110 ordinary gain. 
B)  $3,110 capital gain. 
C)  $8,250 capital loss. 
D)  $8,250 ordinary loss.

Question 11

Wyatt sold 300 shares of Clothes and More,Inc.in 2014 for $30,000.Wyatt's investment portfolio includes the following purchases of Clothes and More,Inc.stock:   Assuming Wyatt does not identify which shares he sold,he will recognize a(an)

Accepted Answer

A)  $8,000 gain. 
B)  $7,125 gain. 
C)  $500 gain. 
D)  $500 loss. 
A)  $8,000 gain. 
B)  $7,125 gain. 
C)  $500 gain. 
D)  $500 loss.

Question 12

Which of the following statements is incorrect regarding the gain or loss from the sale of property received as a gift?

Accepted Answer

A)  If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the gain is the donor's basis. 
B)  If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the loss is the FMV of the asset. 
C)  If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the FMV of the asset. 
D)  If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the donor's adjusted basis. 
A)  If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the gain is the donor's basis. 
B)  If the FMV is less than the donor's adjusted basis at the time of the gift,the basis for figuring the loss is the FMV of the asset. 
C)  If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the FMV of the asset. 
D)  If the FMV is equal to or more than the donor's adjusted basis,the basis for any gain or loss on a sale is the donor's adjusted basis.

Question 13

Stephanie sold the following stock in 2014.She received a 1099-B from each of the companies to record the sale.

Accepted Answer

@#IMG-DLM& a.Complete the following table: @#IMG-DLM& b.Calc

Question 14

The basis of inherited property to the beneficiary is the FMV at the date of death or alternate valuation date.

Accepted Answer

A) True 
 B)False

Question 15

Mikeala has taxable income of $73,240,without consideration of capital gain or loss transactions.Mikeala has a short-term capital gain of $11,000,a short-term capital gain of 3,000,and a long-term capital loss of $4,000.
a.What is the net capital gain(loss)included in taxable income?
b.Is it short term or long term in nature?
c.What is the amount and nature of any carryover?
d.Assuming none of the gains or losses are from collectibles or unrecaptured Section 1250 property,at what tax rate will the gains or losses be taxed to Mikeala? (Mikeala is in the 33% tax bracket for ordinary income.)

Accepted Answer

a.$10,000

Question 16

Amal gave his sister,Dora 100 shares of stock on April 3,2013.Amal originally paid $3,100 for the stock on January 5,2013.At the date of the gift,the fair market value of the stock was $2,800.If no gift tax is paid and Dora sells the stock for $2,700 on August 31,2014,she will recognize:

Accepted Answer

A)  a short term capital loss. 
B)  an ordinary loss. 
C)  a long-term loss. 
D)  no loss on the sale of stock given as a gift. 
A)  a short term capital loss. 
B)  an ordinary loss. 
C)  a long-term loss. 
D)  no loss on the sale of stock given as a gift.

Question 17

Otis bought a 2-unit apartment building in July 2007 for $330,000 and sold it for $400,000 on December 20,2014.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Accepted Answer

A)  $0. 
B)  $70,000. 
C)  $83,493. 
D)  $153,493. 
A)  $0. 
B)  $70,000. 
C)  $83,493. 
D)  $153,493.

Question 18

Jack purchased 100 shares of Ford stock on April 22,2013.If he sells the stock on April 21,2014,what is the character of the sale?

Accepted Answer

A)  If the sale produces a gain,the gain is taxed at preferential rates because the holding period requirement does not apply to stock sales. 
B)  If the sale produces a loss,the entire loss can be taken only in the year of the sale because the stock was held for less than one year. 
C)  Regardless of whether the sale produces a gain or loss,the transaction qualifies for preferential treatment because the asset sold is stock. 
D)  Regardless of whether the sale produces a gain or loss,the transaction does not qualify for preferential treatment because the stock was not held for more than one year. 
A)  If the sale produces a gain,the gain is taxed at preferential rates because the holding period requirement does not apply to stock sales. 
B)  If the sale produces a loss,the entire loss can be taken only in the year of the sale because the stock was held for less than one year. 
C)  Regardless of whether the sale produces a gain or loss,the transaction qualifies for preferential treatment because the asset sold is stock. 
D)  Regardless of whether the sale produces a gain or loss,the transaction does not qualify for preferential treatment because the stock was not held for more than one year.

Question 19

Keiko sells a piece of equipment used in her business for $14,853 on August 10,2014.The equipment was purchased on January 4,2013 at a cost of $12,849.Keiko has taken $3,855 of depreciation on the equipment.What is the amount and classification of the gain on the sale by Keiko?

Accepted Answer

A)  $5,859 ordinary income under Section 1245. 
B)  $5,859 Section 1231 gain. 
C)  $3,855 ordinary income under Section 1245 and $2,004 Section 1231 gain. 
D)  $3,855 Section 1231 gain and $2,004 ordinary income under Section 1245. 
A)  $5,859 ordinary income under Section 1245. 
B)  $5,859 Section 1231 gain. 
C)  $3,855 ordinary income under Section 1245 and $2,004 Section 1231 gain. 
D)  $3,855 Section 1231 gain and $2,004 ordinary income under Section 1245.

Question 20

Before the tax implications of asset sales can be determined,which of the following must be determined?

Accepted Answer

A)  assets must be classified as either personal,trade or business,or investment assets. 
B)  the length of time the taxpayer owned the property. 
C)  whether the assets are subject to depreciation. 
D)  all of these. 
A)  assets must be classified as either personal,trade or business,or investment assets. 
B)  the length of time the taxpayer owned the property. 
C)  whether the assets are subject to depreciation. 
D)  all of these.

A capital asset includes all the following except:

The amount realized from a sale or trade of property is the amount received for the asset minus the basis that will be recognized for tax purposes.

In 2014,Carmen had a net capital loss of $10,000 and taxable income of $100,000.What is Carmen's loss carryforward to 2015?

Shanstella bought a 4-unit apartment building in July 2005 for $360,000 and sold it for $480,000 in 2014.There was $96,541 of accumulated straight-line depreciation on the apartment building.Assuming that Shanstella is in the 33% tax bracket,how much of her gain is taxed at 25%?

Any Section 1245 gain is recognized as "ordinary" to the extent of the depreciation taken.

If land were an investment held in a trade or business,the gain or loss would be reported on Schedule

In 2014,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock: Assuming Daryl uses the single category average cost method,he will realize:

Greg sold some equipment for $72,510 on June 13,2014.Greg had originally purchased the equipment for $86,750 on November 21,2013.The equipment was subject to depreciation of $17,350.What gain or loss will Greg recognize on the sale?

Wyatt sold 300 shares of Clothes and More,Inc.in 2014 for $30,000.Wyatt's investment portfolio includes the following purchases of Clothes and More,Inc.stock: Assuming Wyatt does not identify which shares he sold,he will recognize a(an)

Which of the following statements is incorrect regarding the gain or loss from the sale of property received as a gift?

Stephanie sold the following stock in 2014.She received a 1099-B from each of the companies to record the sale.

The basis of inherited property to the beneficiary is the FMV at the date of death or alternate valuation date.

Amal gave his sister,Dora 100 shares of stock on April 3,2013.Amal originally paid $3,100 for the stock on January 5,2013.At the date of the gift,the fair market value of the stock was $2,800.If no gift tax is paid and Dora sells the stock for $2,700 on August 31,2014,she will recognize:

Otis bought a 2-unit apartment building in July 2007 for $330,000 and sold it for $400,000 on December 20,2014.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Jack purchased 100 shares of Ford stock on April 22,2013.If he sells the stock on April 21,2014,what is the character of the sale?

Keiko sells a piece of equipment used in her business for $14,853 on August 10,2014.The equipment was purchased on January 4,2013 at a cost of $12,849.Keiko has taken $3,855 of depreciation on the equipment.What is the amount and classification of the gain on the sale by Keiko?

Before the tax implications of asset sales can be determined,which of the following must be determined?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 7: Capital Gains and Other Sales of Property

A capital asset includes all the following except:

The amount realized from a sale or trade of property is the amount received for the asset minus the basis that will be recognized for tax purposes.

In 2014,Carmen had a net capital loss of $10,000 and taxable income of $100,000.What is Carmen's loss carryforward to 2015?

Shanstella bought a 4-unit apartment building in July 2005 for $360,000 and sold it for $480,000 in 2014.There was $96,541 of accumulated straight-line depreciation on the apartment building.Assuming that Shanstella is in the 33% tax bracket,how much of her gain is taxed at 25%?

Any Section 1245 gain is recognized as "ordinary" to the extent of the depreciation taken.

If land were an investment held in a trade or business,the gain or loss would be reported on Schedule

In 2014,Daryl sold 425 shares of Basketball Heaven Mutual Fund for $18,000.He made the following purchases of Basketball Heaven stock: Assuming Daryl uses the single category average cost method,he will realize:

Greg sold some equipment for $72,510 on June 13,2014.Greg had originally purchased the equipment for $86,750 on November 21,2013.The equipment was subject to depreciation of $17,350.What gain or loss will Greg recognize on the sale?

Wyatt sold 300 shares of Clothes and More,Inc.in 2014 for $30,000.Wyatt's investment portfolio includes the following purchases of Clothes and More,Inc.stock: Assuming Wyatt does not identify which shares he sold,he will recognize a(an)

Which of the following statements is incorrect regarding the gain or loss from the sale of property received as a gift?

Stephanie sold the following stock in 2014.She received a 1099-B from each of the companies to record the sale.

The basis of inherited property to the beneficiary is the FMV at the date of death or alternate valuation date.

Amal gave his sister,Dora 100 shares of stock on April 3,2013.Amal originally paid $3,100 for the stock on January 5,2013.At the date of the gift,the fair market value of the stock was $2,800.If no gift tax is paid and Dora sells the stock for $2,700 on August 31,2014,she will recognize:

Otis bought a 2-unit apartment building in July 2007 for $330,000 and sold it for $400,000 on December 20,2014.At the time of sale there was $83,493 of accumulated straight-line depreciation on the apartment building.Assuming Otis is in the 33% tax bracket,how much of the gain will be taxed at 25%?

Jack purchased 100 shares of Ford stock on April 22,2013.If he sells the stock on April 21,2014,what is the character of the sale?

Keiko sells a piece of equipment used in her business for $14,853 on August 10,2014.The equipment was purchased on January 4,2013 at a cost of $12,849.Keiko has taken $3,855 of depreciation on the equipment.What is the amount and classification of the gain on the sale by Keiko?

Before the tax implications of asset sales can be determined,which of the following must be determined?

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Gross Income: Inclusions and Exclusions

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters