Question 1

The exchange of shares of stock does not qualify for like-kind exchange treatment.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true?

Accepted Answer

A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true. 
A) A taxpayer's personal residence qualifies for a like-kind exchange. 
B) A taxpayer who sells a personal residence may always exclude the realized gain from taxable income. 
C) A one-time election is available to taxpayers 55 years of age or older which allows them to sell their personal residences and to exclude all of the realized gain. 
D) None of the above are true. 
E) All of the above are true.

Question 3

Emily sold the following investments during the year:
For each stock, calculate the amount and the nature of the gain or loss.

Accepted Answer

a. $15,000 long-term gain
b. $

Question 4

Which one of the following is true about Section 1231 assets?

Accepted Answer

A) Section 1231 assets are treated like capital assets when they produce losses on sale. 
B) Business property held 1 year or less is considered a Section 1231 asset. 
C) Section 1231 assets include company stock. 
D) Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined. 
E) All of the above are false. 
A) Section 1231 assets are treated like capital assets when they produce losses on sale. 
B) Business property held 1 year or less is considered a Section 1231 asset. 
C) Section 1231 assets include company stock. 
D) Section 1231 asset losses must be netted against 1231 asset gains before tax treatment is determined. 
E) All of the above are false.

Question 5

Stewart, age 44, sells his personal residence of 4 years on June 14, 2016, for $190,000. The expenses of sale are $15,000 and he has paid for capital improvements of $3,000. Stewart purchased the residence for $100,000. On February 2, 2017, Stewart purchases and occupies a new residence at a cost of $200,000.
a.Calculate the gain realized on the sale of Stewart's residence.
b.How much gain must be recognized on the sale of Stewart's residence?
c.Calculate Stewart's basis in the new residence.

Accepted Answer

The answer of Stewart, age 44, sells his personal residence...

Question 6

Nick received a gift of stock from his father. Nick's father had purchased the stock 2 years earlier and his father's basis in the stock was $30,000. On the date of the gift, the stock had a fair market value of $25,000.
a.If Nick sells the stock for $33,000, calculate the amount of Nick's gain or loss on the transaction.
b.If Nick sells the stock for $22,000, calculate the amount of Nick's gain or loss on the transaction.
c.If Nick sells the stock for $27,000, calculate the amount of Nick's gain or loss on the transaction.

Accepted Answer

The answer of Nick received a gift of stock from...

Question 7

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's recognized gain and what is the basis in the new building?

Accepted Answer

A) $260,000; $500,000 
B) $200,000; $300,000 
C) $60,000; $300,000 
D) $260,000; $300,000 
E) $60,000; $500,000 
A) $260,000; $500,000 
B) $200,000; $300,000 
C) $60,000; $300,000 
D) $260,000; $300,000 
E) $60,000; $500,000

Question 8

Joseph exchanged land (tax basis of $34,000), that he had held for 4 years as an investment, for similar land valued at $42,000 which was owned by Adrian. In connection with this transaction, Adrian assumed Joseph's $11,000 mortgage. As a result of this transaction Joseph should report a long-term capital gain of:

Accepted Answer

A) $0 
B) $8,000 
C) $11,000 
D) $19,000 
E) None of the above 
A) $0 
B) $8,000 
C) $11,000 
D) $19,000 
E) None of the above

Question 9

The following are owned by Robert. Indicate which are capital assets.
​
a.Rental property at 123 Main Street ______
b.Tables and chairs sold in his furniture business ______
c.The cash register used in his furniture business ______
d.A 1972 Porsche 916 ______
e.The rights to Taylor Swift's song, "Blank Space" ______

Accepted Answer

a. Rental property at 123 Main

Question 10

The office building Donna owned and used for her desk-top publishing business was destroyed by a hurricane. Although the basis of the building was $80,000, Donna carried replacement cost insurance and received $160,000 from the insurance company after it was determined that the building was a complete loss. It cost her $152,000 to rebuild the store in the current year.
a.Calculate Donna's recognized gain, assuming an election under the involuntary conversion provision is made.$__________
b.Calculate Donna's basis in the replacement building.$__________

Accepted Answer

a. A gain of $80,000 was realized, but o

Question 11

On August 8, 2016, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000. On November 1, 2016, he purchased a new residence for $80,000. For 2016, Sam should recognize a gain on the sale of his residence of:

Accepted Answer

A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above 
A) $0 
B) $25,000 
C) $50,000 
D) $130,000 
E) None of the above

Question 12

Which of the following is not true about capital assets?

Accepted Answer

A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) For 2016, net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets. 
A) Real property used in a trade or business is not a capital asset. 
B) Capital losses may be carried back for 3 years to offset capital gains in those years. 
C) For 2016, net long-term capital gains are granted preferential tax treatment. 
D) Individual taxpayers may deduct net capital losses of up to $3,000 per year. 
E) Shares of stock held for investment are capital assets.

Question 13

Cows used in a farming business are Section 1231 property.

Accepted Answer

A) True 
 B)False

Question 14

Russell purchased a house 1 year ago for $150,000 and, due to an employment-related move, sold the house this year for $190,000. What is Russell's taxable gain?

Accepted Answer

$0. The $250,000 exclusion is

Question 15

Sol purchased land as an investment on January 12, 2011 for $85,000. On January 31, 2016, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

Accepted Answer

A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of the above 
A) Long-term capital loss 
B) Long-term capital gain 
C) Short-term capital gain 
D) Short-term capital loss 
E) None of the above

Question 16

In October of the current year, Mike sold a share of Berkshire-Hathaway for $73,000. He had acquired it several years ago at a cost of $42,000. He also sold Microsoft stock he had held for 3 years at a gain of $17,000. He had a short-term $2,000 loss on the sale of stock of a start-up technology company. He has $85,000 in taxable income before capital transactions are taken into account.
​
Assuming Mike is single with no dependents, what is the amount of Mike's tax on the capital transactions?

Accepted Answer

Based on his other taxable inc

Question 17

In 2016, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a capital asset?

Accepted Answer

A) Inventory held by a manufacturer 
B) Accounts receivable held by a dentist 
C) All property owned by a taxpayer other than property specifically noted in the law as an exception 
D) Depreciable property and real estate used in a trade or business 
A) Inventory held by a manufacturer 
B) Accounts receivable held by a dentist 
C) All property owned by a taxpayer other than property specifically noted in the law as an exception 
D) Depreciable property and real estate used in a trade or business

Question 19

If the following are capital assets, mark with a "Yes." If they are not capital assets, mark with a "No."
a.A taxpayer's personal jet ski ______
b.Ford Motor Credit Company bond held by an investor ______
c.A baseball for sale at Sports.com ______
d.J.K.Rowling's personal copy of her original manuscript of
Harry Potter and the Sorcerer's Stone ______
e.An antique grandfather clock inherited from the taxpayer's aunt ______

Accepted Answer

a. Yes
b.

Question 20

Which of the following is a capital asset?

Accepted Answer

A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above 
A) A literary work held by the author 
B) Real estate held by a developer 
C) A taxpayer's principle residence 
D) A truck used in a taxpayer's business 
E) None of the above

The exchange of shares of stock does not qualify for like-kind exchange treatment.

Which of the following statements is true?

Emily sold the following investments during the year: For each stock, calculate the amount and the nature of the gain or loss.

Which one of the following is true about Section 1231 assets?

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's recognized gain and what is the basis in the new building?

The following are owned by Robert. Indicate which are capital assets. a.Rental property at 123 Main Street b.Tables and chairs sold in his furniture business c.The cash register used in his furniture business d.A 1972 Porsche 916 e.The rights to Taylor Swift's song, "Blank Space" __

On August 8, 2016, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000. On November 1, 2016, he purchased a new residence for $80,000. For 2016, Sam should recognize a gain on the sale of his residence of:

Which of the following is not true about capital assets?

Cows used in a farming business are Section 1231 property.

Russell purchased a house 1 year ago for $150,000 and, due to an employment-related move, sold the house this year for $190,000. What is Russell's taxable gain?

Sol purchased land as an investment on January 12, 2011 for $85,000. On January 31, 2016, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

In 2016, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Which of the following is a capital asset?

Which of the following is a capital asset?

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

Exam 8: Capital Gains and Losses

The exchange of shares of stock does not qualify for like-kind exchange treatment.

Which of the following statements is true?

Emily sold the following investments during the year: For each stock, calculate the amount and the nature of the gain or loss.

Which one of the following is true about Section 1231 assets?

Johnny owned a gas station with an adjusted basis of $300,000. After it was destroyed in a fire, he received $560,000 from the insurance company. Within the next year, he bought a new gas station for $500,000. What is Johnny's recognized gain and what is the basis in the new building?

On August 8, 2016, Sam, single, age 62, sold for $210,000 his principal residence, which he has lived in for 10 years, and which had an adjusted basis of $60,000. On November 1, 2016, he purchased a new residence for $80,000. For 2016, Sam should recognize a gain on the sale of his residence of:

Which of the following is not true about capital assets?

Cows used in a farming business are Section 1231 property.

Russell purchased a house 1 year ago for $150,000 and, due to an employment-related move, sold the house this year for $190,000. What is Russell's taxable gain?

Sol purchased land as an investment on January 12, 2011 for $85,000. On January 31, 2016, Sol sold the land for $90,000 cash. What is the nature of the gain or loss?

In 2016, the basis of a taxpayer's replacement residence is equal to the cost of the replacement residence less the gain which was deferred on the sale of the old residence.

Which of the following is a capital asset?

Which of the following is a capital asset?

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