Exam 7: Capital Gains and Other Sales of Property

Samson purchased some equipment for $86,749 on March 15,2013.He decided he did not need the equipment and sold it on March 10,2014 for $82,000.The equipment was subject to depreciation of $16,851 for 2013 and 2014.What gain or loss will Samson recognize on the sale of the equipment?

Jeffery,the owner of a remodeling company and a sole proprietor,sold a commercial building he used in his business.He acquired the building on February 15,2011 for $420,000 and sold it December 30,2014,for $480,000.Jeffery had taken $41,294 in depreciation.Assume Jeffery is in the 39.6% tax bracket and no other assets were sold in 2014. a.What is the adjusted basis of the building? b.What is the amount gain on the sale of the building? c.How much of the gain is considered unrecaptured 1250 gain? d.How much of the gain is considered a capital gain? e.Calculate the tax on the unrecaptured 1250 gain. f.Calculate the tax on the gain considered to be capital in nature.

Otis,the taxpayer,has the following capital gains and losses for the year:

If a taxpayer cannot specifically identify which shares of stock were sold,the average cost of all shares held is used as the adjusted basis of the shares that were sold.

Sammy sells a piece of specialized equipment (with a high resale value)used in his business for $41,650 on September 10,2014.The equipment was purchased on May 20,2011 for $32,000.Sammy has taken $9,200 of depreciation on the equipment.What are the amount and classification of the gain on the sale by Sammy?

Which one of the following is a capital asset?

To qualify as Section 1231 property,the property must be used in a taxpayer's trade or business and must be held for more than one year.

The donee's basis in depreciated property (when the FMV at the time of the gift is less than the donor's basis)is FMV at the time of the gift.

In 2008,Naila purchased land for $77,000 for use in her landscape business.She sold it in 2014 for $83,000.If Naila has no other sales of business or trade property,how will this gain be taxed?

Jeannie purchased 1,000 shares in Course Developers for $10,000 on August 11,2013.The company went bankrupt on May 11,2014 with no hope of recovery for the shareholders.On what date is the stock deemed to be worthless and what is the nature of the loss?

Which one of the following is Section 1231 property?

For sales of Section 1231 business property,long-term gains are taxed at preferential rates while long-term losses are considered ordinary losses and deductible in the year they are incurred.

If the taxpayer has capital gain distributions from a mutual fund and no other capital gain transactions for the year,a Schedule D is not required to be prepared.

The holding period of an asset starts on the date acquired and ends on the day the asset is sold.

When a Section 1231 asset is sold,the gain can be either classified as an ordinary or capital gain.

Property owned by a taxpayer and used either for personal purposes,investment,or in a trade or business is a capital asset.

The basis of property transferred to a taxpayer from a spouse or former spouse incident to a divorce is the FMV of the property at the date the divorce was final.

What is the basis of artistic works that have been gifted to another by the creator?

Inventory on hand at the end of the year is Section 1231 property.

Heidi invested in a mid-sized local company with gross assets of $17,000,000.Heidi purchased 2,000 shares for $44,000 in 1998.In 2014,Heidi sold the stock for $84,000.How is the gain treated for tax purposes?