Question 1

Recognized gains and losses must be properly classified. Proper classification depends upon:

Accepted Answer

A) The tax status of the property. 
B) The manner of the property's disposition. 
C) The holding period of the property. 
D) a., b., and c. 
E) None of the above. 
A) The tax status of the property. 
B) The manner of the property's disposition. 
C) The holding period of the property. 
D) a., b., and c. 
E) None of the above.

Question 2

Charmine, a single taxpayer with no dependents, has already incurred a $10,000 § 1231 gain in 2012 and has no § 1231 lookback losses. The taxpayer purchased a business machine for $100,000 five years ago, $70,000 of depreciation has been taken on it, and the machine is now worth $90,000. How will the net § 1231 gain or loss be affected if the taxpayer trades in the business machine for a like-kind business machine and pays an additional $12,000 in cash to obtain the replacement machine? If Charmine already has $322,000 of taxable income which does not include a $10,000 §1231 gain or any capital gains or losses, what is her taxable income?

Accepted Answer

The current year § 1231 gain will not be

Question 3

Vertical, Inc., has a 2012 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2011.For 2012, Vertical's net § 1231 gain is treated as:

Accepted Answer

A) $45,000 long-term capital gain and $22,000 ordinary loss. 
B) $67,000 ordinary gain. 
C) $45,000 long-term capital gain and $22,000 ordinary gain. 
D) $67,000 capital gain. 
E) None of the above. 
A) $45,000 long-term capital gain and $22,000 ordinary loss. 
B) $67,000 ordinary gain. 
C) $45,000 long-term capital gain and $22,000 ordinary gain. 
D) $67,000 capital gain. 
E) None of the above.

Question 4

"Collectibles" held long-term and sold at a gain are subject to maximum tax rate of 28%.An individual taxpayer recently sold a baseball card for $400.The card had been held for several years and $40 was originally paid for it.The card depicts a famous baseball player (who hit 73 home runs in a recent season) when he was a rookie in the major leagues.Explain why the baseball card is or is not a collectible.

Accepted Answer

The definition of "collectibles" is quit

Question 5

Original issue discount is amortized over the life of the bond.

Accepted Answer

A) True 
 B)False

Question 6

Copper Corporation sold machinery for $27,000 on December 31, 2012.The machinery had been purchased on January 2, 2009, for $30,000 and had an adjusted basis of $21,000 at the date of the sale.For 2012, what should Copper Corporation report?

Accepted Answer

A) Ordinary income of $6,000. 
B) A § 1231 gain of $3,000 and $3,000 of ordinary income. 
C) A § 1231 gain of $6,000. 
D) A § 1231 gain of $6,000 and $3,000 of ordinary income. 
E) None of the above. 
A) Ordinary income of $6,000. 
B) A § 1231 gain of $3,000 and $3,000 of ordinary income. 
C) A § 1231 gain of $6,000. 
D) A § 1231 gain of $6,000 and $3,000 of ordinary income. 
E) None of the above.

Question 7

A personal use property casualty loss is generally deductible only to the extent it exceeds 10% of AGI.

Accepted Answer

A) True 
 B)False

Question 8

The chart below details Sheen's 2010, 2011, and 2012 stock transactions.What is the capital loss carryover to 2012 and what is the net capital gain or loss for 2012?

Accepted Answer

There was a $2,000 net short-term capita

Question 9

Property sold to a related party purchaser that is depreciable by the purchaser may cause the seller to have ordinary gain.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is correct concerning short sales of stock?

Accepted Answer

A) At the time the short sale is made, the taxpayer does not deliver to the purchaser the shares sold short. 
B) At the time the short sale is made, the taxpayer delivers to the purchaser the shares sold short. 
C) At the time the short sale is made, the taxpayer may already own the shares sold short. 
D) At the time the short sale is made, the taxpayer always already owns the shares sold short. 
E) None of the above. 
A) At the time the short sale is made, the taxpayer does not deliver to the purchaser the shares sold short. 
B) At the time the short sale is made, the taxpayer delivers to the purchaser the shares sold short. 
C) At the time the short sale is made, the taxpayer may already own the shares sold short. 
D) At the time the short sale is made, the taxpayer always already owns the shares sold short. 
E) None of the above.

Question 11

The following assets in Jack's business were sold in 2012:   The office equipment had a zero adjusted basis and was purchased for $8,000.The automobile was purchased for $2,000 and sold for $1,200.The ABC stock was purchased for $1,800 and sold for $3,200.In 2012 (the year of sale), Jack should report what amount of net capital gain and net ordinary income?

Accepted Answer

A) $1,700 LTCG. 
B) $600 LTCG and $300 ordinary gain. 
C) $1,400 LTCG and $300 ordinary gain. 
D) $2,500 LTCG and $800 ordinary loss. 
E) None of the above. 
A) $1,700 LTCG. 
B) $600 LTCG and $300 ordinary gain. 
C) $1,400 LTCG and $300 ordinary gain. 
D) $2,500 LTCG and $800 ordinary loss. 
E) None of the above.

Question 12

An individual taxpayer with 2012 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2013.

Accepted Answer

A) True 
 B)False

Question 13

Carol had the following transactions during 2012: a painting held for two years and sold at a gain of $65,000; 100 shares of Gray stock held six months and sold for a loss of $6,000; 50 shares of Yellow stock held 18 months and sold for a gain of $36,000.Carol also had $264,000 of taxable income from other sources than these property transactions.What is Carol's net capital gain or loss and what is her taxable income?

Accepted Answer

Carol has

Question 14

Residential real estate was purchased in 2009 for $345,000, held as rental property, and depreciated straight-line. Assume the land cost was $45,000 and the building cost was $300,000. Depreciation totaled $34,089. The building and land were sold on June 10, 2012, for $683,000 total. What is the tax status of the property, the nature of the gain from the disposition, and is any of it § 1250 depreciation recapture gain or unrecaptured § 1250 gain?

Accepted Answer

The adjusted basis of the property at th

Question 15

All collectibles long-term gain is subject to a potential alternative tax rate of 28%.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following real property could be subject to § 1250 depreciation recapture?

Accepted Answer

A) Leasehold improvements placed in service in 2012 on which § 168(k) additional first-year depreciation was taken. 
B) A building acquired in 1997 on which straight-line depreciation was taken. 
C) Equipment on which accelerated depreciation was taken. 
D) Land which was not depreciated. 
E) a.and b. 
A) Leasehold improvements placed in service in 2012 on which § 168(k) additional first-year depreciation was taken. 
B) A building acquired in 1997 on which straight-line depreciation was taken. 
C) Equipment on which accelerated depreciation was taken. 
D) Land which was not depreciated. 
E) a.and b.

Question 17

A business taxpayer sells depreciable business property with an adjusted basis of $40,000 for $32,000. The taxpayer held the property for more than a year. The taxpayer has an $8,000 § 1231 loss.

Accepted Answer

A) True 
 B)False

Question 18

An individual has a $20,000 § 1245 gain, a $15,000 § 1231 gain, a $13,000 § 1231 loss, a $3,000 § 1231 lookback loss, and a $15,000 long-term capital gain.The net long-term capital gain is:

Accepted Answer

A) $30,000. 
B) $40,000. 
C) $17,000. 
D) $15,000. 
E) None of the above. 
A) $30,000. 
B) $40,000. 
C) $17,000. 
D) $15,000. 
E) None of the above.

Question 19

Seamus had $16,000 of net short-term capital loss in 2011. In 2012, Seamus has $17,000 of long-term capital loss and $26,000 of long-term capital gain. Which of the following statements is correct?

Accepted Answer

A) Seamus had a $13,000 short-term capital loss carryover to 2012. 
B) Seamus has an $9,000 2012 net long-term capital gain. 
C) Seamus has a $4,000 2012 net short-term capital loss. 
D) a.and c. 
E) None of the above. 
A) Seamus had a $13,000 short-term capital loss carryover to 2012. 
B) Seamus has an $9,000 2012 net long-term capital gain. 
C) Seamus has a $4,000 2012 net short-term capital loss. 
D) a.and c. 
E) None of the above.

Question 20

Vanna owned an office building that had been held more than one year when it was sold for $567,000.The real estate had an adjusted basis of $45,000 for the land and $233,000 for the building.Straight-line depreciation of $162,000 had been taken on the building.What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?

Accepted Answer

The real estate was used in business and

Exam 14: Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Recognized gains and losses must be properly classified. Proper classification depends upon:

Vertical, Inc., has a 2012 net § 1231 gain of $67,000 and had a $22,000 net § 1231 loss in 2011.For 2012, Vertical's net § 1231 gain is treated as:

Original issue discount is amortized over the life of the bond.

Copper Corporation sold machinery for $27,000 on December 31, 2012.The machinery had been purchased on January 2, 2009, for $30,000 and had an adjusted basis of $21,000 at the date of the sale.For 2012, what should Copper Corporation report?

A personal use property casualty loss is generally deductible only to the extent it exceeds 10% of AGI.

The chart below details Sheen's 2010, 2011, and 2012 stock transactions.What is the capital loss carryover to 2012 and what is the net capital gain or loss for 2012?

Property sold to a related party purchaser that is depreciable by the purchaser may cause the seller to have ordinary gain.

Which of the following is correct concerning short sales of stock?

An individual taxpayer with 2012 net short-term capital loss of $5,000 generally can deduct up to $3,000 for AGI and carry the balance forward to 2013.

All collectibles long-term gain is subject to a potential alternative tax rate of 28%.

Which of the following real property could be subject to § 1250 depreciation recapture?

A business taxpayer sells depreciable business property with an adjusted basis of $40,000 for $32,000. The taxpayer held the property for more than a year. The taxpayer has an $8,000 § 1231 loss.

An individual has a $20,000 § 1245 gain, a $15,000 § 1231 gain, a $13,000 § 1231 loss, a $3,000 § 1231 lookback loss, and a $15,000 long-term capital gain.The net long-term capital gain is:

Seamus had $16,000 of net short-term capital loss in 2011. In 2012, Seamus has $17,000 of long-term capital loss and $26,000 of long-term capital gain. Which of the following statements is correct?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

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