Question 1

To be considered a Section 1202 gain,the stock being sold must meet all of the following characteristics except

Accepted Answer

A)  the stock must be issued after August 10, 1993. 
B)  the stock must be held more than five years. 
C)  the corporation which issued the stock must be a C corporation. 
D)  at least 50% of the value of the corporation's assets must be used in the active conduct of one or more qualified trades or businesses. 
A)  the stock must be issued after August 10, 1993. 
B)  the stock must be held more than five years. 
C)  the corporation which issued the stock must be a C corporation. 
D)  at least 50% of the value of the corporation's assets must be used in the active conduct of one or more qualified trades or businesses.

Question 2

Rick sells stock of Ty Corporation,which has an adjusted basis of $20,000,for $22,000.He pays a sales commission of $500.In computing his gain or loss,the amount realized by Rick is $1,500.

Accepted Answer

A) True 
 B)False

Question 3

Kendrick,who has a 33% marginal tax rate,had the following results from transactions during the year:
 
After offsetting the STCL,what is (are) the resulting gain(s)?

Accepted Answer

A)  $16,000 collectibles gain, $8,000 LTCG 
B)  $20,000 collectibles gain, $4,000 LTCG 
C)  $24,000 LTCG 
D)  $20,000 collectibles gain, $8,000 LTCG 
A)  $16,000 collectibles gain, $8,000 LTCG 
B)  $20,000 collectibles gain, $4,000 LTCG 
C)  $24,000 LTCG 
D)  $20,000 collectibles gain, $8,000 LTCG

Question 4

In a common law state,jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to

Accepted Answer

A)  the decedent's basis before death. 
B)  the total fair market value of the entire property at the date of death (the alternative valuation date was not elected). 
C)  half of the fair market value of the entire property at the date of death (the alternative valuation date was not elected). 
D)  half of the basis just before death, plus half of the fair market value at the date of death (the alternative valuation date was not elected). 
A)  the decedent's basis before death. 
B)  the total fair market value of the entire property at the date of death (the alternative valuation date was not elected). 
C)  half of the fair market value of the entire property at the date of death (the alternative valuation date was not elected). 
D)  half of the basis just before death, plus half of the fair market value at the date of death (the alternative valuation date was not elected).

Question 5

If an individual taxpayer's net long-term capital losses exceed the net short-term capital gains,the excess may be offset against ordinary income up to $3,000 per year.Any excess losses over $3,000 may be carried back three years and carried forward five years.

Accepted Answer

A) True 
 B)False

Question 6

Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be

Accepted Answer

A)  ($10,000) loss. 
B)  ($13,000) loss. 
C)  ($75,000) loss. 
D)  ($78,000) loss. 
A)  ($10,000) loss. 
B)  ($13,000) loss. 
C)  ($75,000) loss. 
D)  ($78,000) loss.

Question 7

Unless the alternate valuation date is elected,the basis of property received from a decedent is generally the property's fair market value at the date of decedent's death.

Accepted Answer

A) True 
 B)False

Question 8

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

During the current year,Don's aunt Natalie gave him a house.At the time of the gift,the house had a FMV of $144,000 and his aunt's adjusted basis was $133,000.After deducting the annual exclusion,the amount of the gift was $130,000.His aunt paid a gift tax of $20,000 on the house.What is Don's basis in the house for purposes of determining gain?

Accepted Answer

A)  $130,000 
B)  $133,000 
C)  $134,692 
D)  $144,000 
A)  $130,000 
B)  $133,000 
C)  $134,692 
D)  $144,000

Question 10

Allison buys equipment and pays cash of $50,000,signs a note of $10,000 and assumes a liability on the property for $3,000.In addition,Allison pays an installation cost of $500 and a delivery cost of $800.Allison's basis in the asset is

Accepted Answer

A)  $60,000. 
B)  $63,000. 
C)  $63,500. 
D)  $64,300. 
A)  $60,000. 
B)  $63,000. 
C)  $63,500. 
D)  $64,300.

Question 11

Melody inherited 1,000 shares of Corporation Zappa stock from her mother who died on March 4 of the current year.Her mother paid $30 per share for the stock on September 2,2005.The FMV of the stock on the date of death was $65 per share.On September 4 of the current year,the FMV of the stock was $70 per share.Melody sold the stock for $85 per share on December 3.The estate qualified for,and the executor elected,the alternate valuation method for these and other assets in the estate.An estate tax return was filed.What was Melody's basis in the stock on the date of the sale?

Accepted Answer

A)  $ 30,000 
B)  $ 65,000 
C)  $ 70,000 
D)  $ 85,000 
A)  $ 30,000 
B)  $ 65,000 
C)  $ 70,000 
D)  $ 85,000

Question 12

During the current year,Tony purchased new car wash equipment for use in his service station business.Tony's costs in connection with the new equipment this year were as follows:
 
What is Tony's basis in the car wash equipment?

Accepted Answer

A)  $49,000 
B)  $49,600 
C)  $52,600 
D)  $54,600 
A)  $49,000 
B)  $49,600 
C)  $52,600 
D)  $54,600

Question 13

Gains and losses are recognized when property is disposed of by gift or bequest.

Accepted Answer

A) True 
 B)False

Question 14

Douglas and Julie are a married couple who live in Louisiana,a community property state.They jointly own property with an adjusted basis of $140,000.On December 2 of this year,Julie died when the property had a fair market value of $160,000.Douglas's basis in the property after Julie's death is

Accepted Answer

A)  $0. 
B)  $140,000. 
C)  $150,000. 
D)  $160,000. 
A)  $0. 
B)  $140,000. 
C)  $150,000. 
D)  $160,000.

Question 15

The holding period of property received from a decedent is based on the actual time the property is held by the decedent.

Accepted Answer

A) True 
 B)False

Question 16

What type of property should be transferred to heirs at a decedent's death and why? Should estate planning also mean that some property is transferred prior to death? Why?

Accepted Answer

Property transferred at decedent's death

Question 17

Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000.Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000.Jessica sold the stock rights for $4,000.Jessica's gain or loss on the sale was

Accepted Answer

A)  $1,000. 
B)  $3,000. 
C)  $4,000. 
D)  ($4,000). 
A)  $1,000. 
B)  $3,000. 
C)  $4,000. 
D)  ($4,000).

Question 18

Bad debt losses from nonbusiness debts are deductible as short-term or long-term capital losses depending on how long the debt was outstanding.

Accepted Answer

A) True 
 B)False

Question 19

Renee is single and has taxable income of $480,000 without considering the sale of a capital asset (land held for investment) in September of 2017 for $25,000.That asset was purchased six years earlier and has a tax basis of $5,000.The tax liability applicable to only the capital gain (without consideration of the additional Medicare tax) is

Accepted Answer

A)  $7,920. 
B)  $5,600. 
C)  $3,000. 
D)  $4,000. 
A)  $7,920. 
B)  $5,600. 
C)  $3,000. 
D)  $4,000.

Question 20

Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2017 for $91,500.The bond matures in five years.In 2017 Rana will recognize interest income of

Accepted Answer

A)  $0. 
B)  $5,000. 
C)  an amount less than $5,000 (but more than $0). 
D)  an amount greater than $5,000. 
A)  $0. 
B)  $5,000. 
C)  an amount less than $5,000 (but more than $0). 
D)  an amount greater than $5,000.

To be considered a Section 1202 gain,the stock being sold must meet all of the following characteristics except

Rick sells stock of Ty Corporation,which has an adjusted basis of $20,000,for $22,000.He pays a sales commission of $500.In computing his gain or loss,the amount realized by Rick is $1,500.

Kendrick,who has a 33% marginal tax rate,had the following results from transactions during the year: After offsetting the STCL,what is (are) the resulting gain(s)?

In a common law state,jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to

If an individual taxpayer's net long-term capital losses exceed the net short-term capital gains,the excess may be offset against ordinary income up to $3,000 per year.Any excess losses over $3,000 may be carried back three years and carried forward five years.

Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be

Unless the alternate valuation date is elected,the basis of property received from a decedent is generally the property's fair market value at the date of decedent's death.

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

Allison buys equipment and pays cash of $50,000,signs a note of $10,000 and assumes a liability on the property for $3,000.In addition,Allison pays an installation cost of $500 and a delivery cost of $800.Allison's basis in the asset is

During the current year,Tony purchased new car wash equipment for use in his service station business.Tony's costs in connection with the new equipment this year were as follows: What is Tony's basis in the car wash equipment?

Gains and losses are recognized when property is disposed of by gift or bequest.

Douglas and Julie are a married couple who live in Louisiana,a community property state.They jointly own property with an adjusted basis of $140,000.On December 2 of this year,Julie died when the property had a fair market value of $160,000.Douglas's basis in the property after Julie's death is

The holding period of property received from a decedent is based on the actual time the property is held by the decedent.

What type of property should be transferred to heirs at a decedent's death and why? Should estate planning also mean that some property is transferred prior to death? Why?

Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000.Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000.Jessica sold the stock rights for $4,000.Jessica's gain or loss on the sale was

Bad debt losses from nonbusiness debts are deductible as short-term or long-term capital losses depending on how long the debt was outstanding.

Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2017 for $91,500.The bond matures in five years.In 2017 Rana will recognize interest income of

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters

Exam 5: Property Transactions: Capital Gains and Losses

To be considered a Section 1202 gain,the stock being sold must meet all of the following characteristics except

Rick sells stock of Ty Corporation,which has an adjusted basis of $20,000,for $22,000.He pays a sales commission of $500.In computing his gain or loss,the amount realized by Rick is $1,500.

Kendrick,who has a 33% marginal tax rate,had the following results from transactions during the year: After offsetting the STCL,what is (are) the resulting gain(s)?

In a common law state,jointly owned property left to the surviving spouse will have a basis after the estate is settled equal to

If an individual taxpayer's net long-term capital losses exceed the net short-term capital gains,the excess may be offset against ordinary income up to $3,000 per year.Any excess losses over $3,000 may be carried back three years and carried forward five years.

Tina purchases a personal residence for $278,000,but subsequently converts the property to rental property when its FMV is $275,000.Assume depreciation of $65,000 has been deducted after conversion to rental use.If Tina sells the property for $200,000,her realized gain or loss will be

Unless the alternate valuation date is elected,the basis of property received from a decedent is generally the property's fair market value at the date of decedent's death.

Gertie has a NSTCL of $9,000 and a NLTCG of $5,500 during the current taxable year.After gains and losses are offset,Gertie reports

Allison buys equipment and pays cash of $50,000,signs a note of $10,000 and assumes a liability on the property for $3,000.In addition,Allison pays an installation cost of $500 and a delivery cost of $800.Allison's basis in the asset is

During the current year,Tony purchased new car wash equipment for use in his service station business.Tony's costs in connection with the new equipment this year were as follows: What is Tony's basis in the car wash equipment?

Gains and losses are recognized when property is disposed of by gift or bequest.

Douglas and Julie are a married couple who live in Louisiana,a community property state.They jointly own property with an adjusted basis of $140,000.On December 2 of this year,Julie died when the property had a fair market value of $160,000.Douglas's basis in the property after Julie's death is

The holding period of property received from a decedent is based on the actual time the property is held by the decedent.

What type of property should be transferred to heirs at a decedent's death and why? Should estate planning also mean that some property is transferred prior to death? Why?

Jessica owned 200 shares of OK Corporation with a basis of $12,000 and a FMV of $24,000.Jessica received 20 stock rights as a nontaxable distribution with a total FMV of $8,000.Jessica sold the stock rights for $4,000.Jessica's gain or loss on the sale was

Bad debt losses from nonbusiness debts are deductible as short-term or long-term capital losses depending on how long the debt was outstanding.

Rana purchases a 5%,$100,000 corporate bond at issuance on January 1,2017 for $91,500.The bond matures in five years.In 2017 Rana will recognize interest income of

An Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters