Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

Casualty gains and losses from business or investment property:

Accepted Answer

A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions. 
A) May be treated differently depending on whether the property has been held 1 year or less or has been held over 1 year. 
B) Are treated the same as casualty gains and losses from personal property. 
C) Are subject to the 10 percent of adjusted gross income limitation. 
D) Are not subject to the depreciation recapture provisions. A

Question 3

If property is inherited by a taxpayer,

Accepted Answer

A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death. 
A) To the recipient, the basis for the property is the same as the basis to the decedent. 
B) At sale date, the basis of the property to the recipient differs depending on whether the property was sold at a gain or a loss. 
C) At sale date, the recipient will not have a gain or loss even if the recipient has held the property for more than a year. 
D) In general, the basis to the recipient is the fair market value at the decedent's date of death. D

Question 4

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

Accepted Answer

A) True 
 B)False

Question 5

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

Accepted Answer

A) True 
 B)False

Question 6

In the current year, Penny exchanges an investment property in Santa Barbara with a mountain view for a lot with an ocean view in a qualifying like-kind exchange. Penny's basis in the land given up is $100,000 and the property has a fair market value of $250,000. In exchange for her property, Penny receives land with a fair market value of $200,000 and cash of $20,000. In addition, the other party to the exchange assumes a mortgage loan on Penny's property of $30,000.
a.Calculate Penny's realized gain, if any, on the exchange.
b.Calculate Penny's recognized gain, if any, on the exchange.
c.Calculate Penny's basis in the property received.

Accepted Answer

The answer of In the current year, Penny exchanges an...

Question 7

Bev owns an apartment complex she purchased 10 years ago for $480,000 with a $80,000 cash down payment accompanied by a $400,000 loan. Bev has made $70,000 of capital improvements on the complex and her depreciation claimed on the building to date is $100,000. Calculate Bev's adjusted basis in the building.

Accepted Answer

$450,000 =

Question 8

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

Accepted Answer

A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above 
A) $5,000 
B) $10,000 
C) $20,000 
D) $30,000 
E) None of the above

Question 9

In the current year, Estes has net short-term capital losses of $3,000, a net long-term capital loss of $45,000, and taxable income from wages of $35,000.
a.Calculate the amount of Estes' deduction for capital losses for the current year.
b.Calculate the amount and nature (short-term or long-term) of his capital loss carryforward.
c.For how many years may Estes carry the unused loss forward?

Accepted Answer

The answer of In the current year, Estes has net...

Question 10

What is the treatment given to personal casualty gains and losses?

Accepted Answer

Personal casualty gains and losses are f

Question 11

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

Accepted Answer

A) True 
 B)False

Question 12

In the current year, 70 year-old Jeanette sells her personal residence of the last 40 years for $365,000. Jeanette's basis in her residence is $70,000. 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

The answer of In the current year, 70 year-old Jeanette...

Question 13

If a capital asset acquired August 5, 2015 is sold on February 6, 2016, any gain is a short-term capital gain.

Accepted Answer

A) True 
 B)False

Question 14

A taxpayer's personal automobile is a capital asset.

Accepted Answer

A) True 
 B)False

Question 15

Sol purchased land as an investment on January 12, 2011, for $85,000. On January 31, 2016, Sol sold the land for $25,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount realized (not gain realized) on the sale of the land?

Accepted Answer

A) $10,000 
B) $25,000 
C) $70,000 
D) $95,000 
E) None of the above 
A) $10,000 
B) $25,000 
C) $70,000 
D) $95,000 
E) None of the above

Question 16

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

Accepted Answer

A) True 
 B)False

Question 17

In the current year, 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 the current year?

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 18

If a capital asset acquired on October 27, 2008 is sold on April 30, 2016 for a gain, the gain is a long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is correct with respect to the deferral provisions of the tax law?

Accepted Answer

A) The like-kind exchange provision is elective. 
B) The involuntary conversion provision is elective. 
C) The exclusion of gain on the sale of a personal residence is elective. 
D) Both the like-kind exchange and the involuntary conversion provisions are elective. 
E) None of the above. 
A) The like-kind exchange provision is elective. 
B) The involuntary conversion provision is elective. 
C) The exclusion of gain on the sale of a personal residence is elective. 
D) Both the like-kind exchange and the involuntary conversion provisions are elective. 
E) None of the above.

Question 20

During 2016, William sold the following capital assets:
Calculate the following:
a.Total short-term capital gain/loss realized for tax purposes
b.Total long-term capital gain/loss realized for tax purposes
c.Deductible capital gain/loss
d.The amount and nature (short-term or long-term) of his capital loss carryforward
e.Assuming that William has no capital gain or loss for 2017, how much can he deduct in 2017 and what is the amount and nature of any carryforward to 2018?

Accepted Answer

a. $5,000 short-term loss ($2,000 - $7,0

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

Casualty gains and losses from business or investment property:

If property is inherited by a taxpayer,

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

What is the treatment given to personal casualty gains and losses?

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

If a capital asset acquired August 5, 2015 is sold on February 6, 2016, any gain is a short-term capital gain.

A taxpayer's personal automobile is a capital asset.

Sol purchased land as an investment on January 12, 2011, for $85,000. On January 31, 2016, Sol sold the land for $25,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount realized (not gain realized) on the sale of the land?

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

In the current year, 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 the current year?

If a capital asset acquired on October 27, 2008 is sold on April 30, 2016 for a gain, the gain is a long-term capital gain.

Which of the following statements is correct with respect to the deferral provisions of the tax law?

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

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Exam 8: Capital Gains and Losses

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

Casualty gains and losses from business or investment property:

If property is inherited by a taxpayer,

The condemnation of property is not an involuntary conversion, since it is done pursuant to a government decree.

Gain recognized on the sale of a Section 1245 asset is classified as ordinary income up to the amount of depreciation claimed.

An asset has an original basis of $25,000 and depreciation has been claimed for the asset in the amount of $20,000. If the asset's adjusted basis is $15,000, what is the amount of capital improvements that have been made to the asset?

What is the treatment given to personal casualty gains and losses?

The exclusion of gain on the sale of a personal residence may be elected only by a taxpayer who has owned three or more residences.

If a capital asset acquired August 5, 2015 is sold on February 6, 2016, any gain is a short-term capital gain.

A taxpayer's personal automobile is a capital asset.

Sol purchased land as an investment on January 12, 2011, for $85,000. On January 31, 2016, Sol sold the land for $25,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount realized (not gain realized) on the sale of the land?

If property is received from a decedent, the taxpayer who inherits the property has the same basis in the property as the decedent.

In the current year, 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 the current year?

If a capital asset acquired on October 27, 2008 is sold on April 30, 2016 for a gain, the gain is a long-term capital gain.

Which of the following statements is correct with respect to the deferral provisions of the tax law?

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