Exam 11: Property Dispositions

Omicron Corporation had the following capital gains and losses for 2016 through 2018: ? 2016 2017 2018 \ 15,000 \ (30,000) \ 60,000 Omicron's net capital gain for 2018 is:

Cheryl purchased 500 shares of Qualified Small Business Stock (QSB) for $900,000 on March 2, 2010. On November 29, 2018, she sells the stock for $1,000,000. Cheryl also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000. Cheryl has $180,000 of other income. Which of the following statements about the stock sale is/are true? I.The tax paid on Cheryl's two stock sales is $4,200. II.Cheryl can only deduct $3,000 of the $10,000 loss on the sale of the stock. ​

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all. -On December 1, 2016, George paid $17,500 for a painting. On October 31, 2018, he sells the painting for $26,750.

Trojan Inc. was incorporated in 2015. In 2015, it had no Section 1231 transactions. In 2016, Trojan had a net Section 1231 loss of $35,000. In 2017, Trojan had a net Section 1231 gain of $10,000. In 2018 Trojan has a $50,000 net Section 1231 gain. Trojan should treat the 2018 gain as

Maria acquired a personal computer to use 100% in her business for $6,000. She took MACRS deductions of $2,880 before selling it in current year. Determine the amount and character of the gain (loss) recognized on the sale of the computer, assuming a sales price that differs in each of the three independent situations:

Elizabeth paid $400,000 for a warehouse. Using 39-year straight-line depreciation, Elizabeth deducts $24,868 for the first two years of usage. At the beginning of the third year, Elizabeth sells the warehouse for $380,000. How much of the gain is recaptured as Section 1250 ordinary income?

Kate bought residential rental property for $500,000. She reported a total of $100,000 of straight-line depreciation. Kate sells the building in 2018 for $425,000. What are the immediate tax consequences of the sale? (Do not consider Kate's other transactions). I.If Kate's rental activity is a production-of-income (investment) activity, she will report a $25,000 long-term capital gain. II.If Kate's rental activity is a trade or business, she will report $25,000 of Unrecaptured Section 1250 gain. ​

Section 1231 assets are certain trade or business assets that are not capital assets but are treated as such when sold at a gain or a loss.

Dontrell sells a building used in his business at a gain of $20,000. The building was purchased in 2006, and $15,000 of depreciation had been deducted on the building to the date of sale. Dontrell's marginal tax rate is 32% without considering these two transactions. As a result of these transactions I.Dontrell will pay additional tax of $4,500. II.The building is Section 1245 property. ​

Which of the following is not a capital asset?

Section 1231 property receives preferential tax treatment. The preference(s) include(s) I.Net Section 1231 losses are deductible as short-term capital losses. II.Net Section 1231 gains are reportable as long-term capital gains. III.Net Section 1231 losses are deductible as long-term capital losses. IV.Net Section 1231 losses are deductible as ordinary losses. ​

Classify the gain or loss on each of George's assets listed below using the following codes. Note: a code may be used once, more than once, or not at all. -George sells his personal use automobile at a loss of $4,300.

Dwight, a single taxpayer, has taxable income of $75,000 from all sources except capital gains. He has a collectibles gain of $1,000. What is the actual tax saving Dwight receives because of any special treatment of his $1,000 collectibles gain?

Drew traded his office copier in for a new one. The old copier had an adjusted basis of $400. The new copier cost $1,350, and he was given a trade-in allowance of $500. I.The amount realized is $400. II.Drew has a realized gain of $100. ​

Unrecaptured Section 1250 gain I.applies to real property owned by individuals and corporations. II.is the gain on the sale of real estate not already classified as ordinary income if the property were Section 1245 property. ​

When her property was fully depreciated and was still encumbered by a mortgage of $6,000, Jamelle sells it subject to the mortgage to David for $1,000. What is Jamelle's realized gain or loss?

Pidgeon, Inc. has the following gains and losses from Section 1231 property during 2018: ? Casualty losses \ (4,000) Casualty gains 5,000 Section 1231 gains 6,000 Section 1231 losses (3,000) No net Section 1231 losses have been deducted as ordinary losses in prior years. How much of the 2018 Section 1231 gains and losses are recognized as long-term capital gains?

Sybil purchased 500 shares of Qualified Small Business Stock (QSB) for $25,000 on March 2, 2003. On November 29, 2018, she sells the stock for $125,000. Sybil also sells 100 shares of stock she acquired two years ago realizing a gain of $20,000. Sybil has $100,000 of other income. Which of the following statements about the stock sale is/are true? I.The tax paid on Sybil's two stock sales is $17,000. II.The tax rate on the $20,000 gain is 15%. ​

Sally owns 700 shares of Fashion Styles Clothing common stock. Sally purchased the 700 shares as follows: ? Purchase Date Number of Shares Total Cost March 2014 200 \ 2,000 August 2014 300 \ 3,600 January 2015 200 \ 3,000 As of December 29, 2018, Sally has not sold any securities. She needs to send a tuition payment of $5,200 to her daughter's boarding school in Zurich before year-end. Since the Fashion Styles Clothing stock is selling for $13 per share, Sally plans to dispose of 400 shares to cover the tuition. Ignoring commissions and transaction costs, what is the optimal tax result of selling 400 shares?

Phi Corporation had the following capital gains and losses for 2016 through 2018: ? 2016 2017 2018 \ 15,000 \ (40,000) \ 10,000 I.Phi can deduct a loss of $\$ 15,000$ in 2018 . II.Phi will carry forward a $\$ 15,000$ capital loss to 2019 .