Question 1

Unrecaptured Section 1250 gain
I.is subject to a maximum tax rate of 25%.
II.applies only to real property owned by individuals.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 2

The amount realized equals the gross selling price less any selling expenses.

Accepted Answer

A) True 
 B)False

Question 3

Stan sells a piece of land he used in his auto repair business at a gain of $9,000 in 2018. In addition, Stan sells equipment he purchased in 2013 for $8,000. He paid $20,000 for the equipment that had an adjusted basis of $12,000 when it was sold. He also sells some stock in 2018 at a loss of $11,000. No losses on the disposition of assets were recognized in prior years. The effect of these transactions on Stan's 2018 taxable income is:

Accepted Answer

A) Decrease of $6,000. 
B) Decrease of $3,000. 
C) Increase of $6,000. 
D) Zero, with a long-term capital loss carryback of $2,000. 
E) Zero, with a long-term capital loss carryback of $6,000. 
A) Decrease of $6,000. 
B) Decrease of $3,000. 
C) Increase of $6,000. 
D) Zero, with a long-term capital loss carryback of $2,000. 
E) Zero, with a long-term capital loss carryback of $6,000.

Question 4

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 a fully depreciated air compressor that cost $975 for $650. The compressor was used to operate air tools.

Accepted Answer

A) Long-term capital 
B) Short-term capital 
C) Collectible gain 
D) Section 1231 
E) Section 1245
F)Section 1250
G)Ordinary income/loss
H)Nontaxable/nondeductible 
A) Long-term capital 
B) Short-term capital 
C) Collectible gain 
D) Section 1231 
E) Section 1245
F)Section 1250
G)Ordinary income/loss
H)Nontaxable/nondeductible

Question 5

LeRoy has the following capital gains and losses for the current year:
?
$\begin{array}{lr}
\text { Short-term capital gain } & \$ 10,000 \
\text { Collectible loss } & (3,000) \
\text { Long-term capital gain } & 5,000
\end{array}$

If LeRoy is single and has taxable income from other sources of $52,000, what is the tax on his capital gains?

Accepted Answer

A) $1,800 
B) $2,500 
C) $2,640 
D) $3,000 
A) $1,800 
B) $2,500 
C) $2,640 
D) $3,000

Question 6

Milton has the following transactions related to his investments and his business during 2018:
?
 (1) Stock purchased in 2004 is sold at a gain of $ \$ 2,000 $.
(2) Bonds purchased in 2018 are sold at a loss of $ \$ 7,000 $.
(3) A building used in his business is sold at a loss of $ \$ 6,000 $. The building had been purchased in 1997 and $ \$ 18,000 $ of depreciation had been taken on the buil ding.
(4) Equipment purchased in 2010 is sold at a gain of $ \$ 12,000 $. Depreciation of $ \$ 9,000 $ had been taken before the sale.
(5) A delivery van is destroyed in an accident. Milton realizes a loss of $ \$ 5,000 $ on the van. He uses the $ \$ 13,000 $ of insurance proceeds as a down payment on a new van costing $ \$ 28,000 $.
 
a.Determine the amount and character of each gain or loss.
b.Determine the effect of the gains and losses on Milton's 2018 adjusted gross income. You must present the calculations in proper form to receive full credit.

Accepted Answer

a.
b.
Section 1231 Netting:
 (1) Long-te

Question 7

In 2015, Jim had a $5,000 net Section 1231 gain. In 2017, Jim reported a Section 1231 loss of $12,000. In 2018, Jim has a $15,000 net Section 1231 gain. He had no other sales of property in 2018. What is Jim's ordinary income from his 2018 property transactions?

Accepted Answer

A) $- 0 - 
B) $7,000 
C) $3,000 
D) $12,000 
E) $15,000 
A) $- 0 - 
B) $7,000 
C) $3,000 
D) $12,000 
E) $15,000

Question 8

Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000.
I.Melissa's tax on the $7,500 gain is $1,125.
II.Melissa has a deductible capital loss of $3,000 in 2018.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 9

Match each statement with the correct term below.
-Unrecaptured Section 1250 gain

Accepted Answer

A) Stocks, bonds, options. 
B) Depreciable real property. 
C) All or part of any gain on sale is excluded. 
D) Taxed at a maximum rate of 25%. 
E) Gain or loss on the sale of artwork.
F)Depreciable tangible personal property.
G)Subject to full recapture as ordinary income of all depreciation taken.
H)Gain on real property attributable to excess depreciation is ordinary income. 
A) Stocks, bonds, options. 
B) Depreciable real property. 
C) All or part of any gain on sale is excluded. 
D) Taxed at a maximum rate of 25%. 
E) Gain or loss on the sale of artwork.
F)Depreciable tangible personal property.
G)Subject to full recapture as ordinary income of all depreciation taken.
H)Gain on real property attributable to excess depreciation is ordinary income.

Question 10

All of the gain from the sale of qualified small business stock, purchased after 9/27/2010 and held more than five years is excluded from tax.

Accepted Answer

A) True 
 B)False

Question 11

During 2003, Krump Corporation bought a factory building for $500,000. It deducted $180,000 of cost recovery deductions using straight-line depreciation while the building was in service. Krump sells the building in 2018 for $500,000. What are the tax consequences of the sale? (Do not consider Krump's other transactions).

Accepted Answer

A) $180,000 Section 1231 gain. 
B) $180,000 unrecaptured Section 1250 gain. 
C) $180,000 recaptured under Section 1245. 
D) $180,000 Section 1250 gain 
E) $ 90,000 Section 1231 income; and $ 90,000 ordinary income, recaptured under Section 1250. 
A) $180,000 Section 1231 gain. 
B) $180,000 unrecaptured Section 1250 gain. 
C) $180,000 recaptured under Section 1245. 
D) $180,000 Section 1250 gain 
E) $ 90,000 Section 1231 income; and $ 90,000 ordinary income, recaptured under Section 1250.

Question 12

Corky receives a gift of property from her Aunt Cynthia. Cynthia purchased the property 17 years ago for $375,000. On the date of the gift, the property is appraised at $500,000. What is Corky's holding period for the property if she sells it one month after the gift was completed?

Accepted Answer

A) Short-term. 
B) Long-term. 
C) Holding period is not relevant since the gain is ordinary. 
D) Holding period classification cannot be determined without knowing the selling price. 
A) Short-term. 
B) Long-term. 
C) Holding period is not relevant since the gain is ordinary. 
D) Holding period classification cannot be determined without knowing the selling price.

Question 13

Discuss the general differences between Section 1245 and Section 1250 property.

Accepted Answer

Historically, the distinction between th

Question 14

Dragonian Corporation sells a depreciable asset. Dragonian paid $50,000 for the asset. Accelerated depreciation on the asset is $12,000 up to the date of sale. Straight-line depreciation is $8,000. Determine the amount and character of the gain (loss) on the sale under each of the following assumptions:
a.The asset is equipment. Dragonian deducted the maximum depreciation and the sales price is $44,000.
b.The asset is an office building purchased in 1984. Dragonian deducted the maximum depreciation and the sales price is $54,000.
c.The asset is an office building purchased in 2006. Dragonian deducted straight-line depreciation and the sales price is $54,000.

Accepted Answer

@#IMG-DLM&_TB1198_00

Question 15

Cathy owns property subject to a mortgage of $5,000. Annual real estate taxes are $800 and are due and payable on December 31. Cathy sells her property on July 1 of the current year. The buyer assumes her $5,000 mortgage, and Cathy agrees to finance the sale by taking a mortgage note of $50,000 and property valued at $7,500. The buyer agrees to pay the seller's portion of the property taxes. What is Cathy's amount realized?

Accepted Answer

A) $50,000 
B) $57,500 
C) $62,500 
D) $62,900 
E) $63,300 
A) $50,000 
B) $57,500 
C) $62,500 
D) $62,900 
E) $63,300

Question 16

Warren's 2018 adjusted gross income consists of the following items:
?
$$\begin{array} { l c } 
\text { Salary } & \$ 150,000 \
\text { Interest income } & 15,000 \
\text { Rental income } & 18,000 \
\text { Section } 1245 \text { gains } & 25,000 \
\text { Section } 1231 \text { gains } & 22,000 \
\text { Section } 1231 \text { losses } & ( 13,000 ) \
\text { LTCG } & 22,000 \
\text { LTCL } & ( 8,000 ) \
\text { STCG } & 2,000 \
\text { STCL Carryover } & ( 9,000 )
\end{array}$$
Warren's combined §1231 gains and losses recognized over the prior five tax years included a net loss of $10,000. The STCL carryover arose from a loss reported in 2013.
What net amounts of ordinary income, LTCG income and STCG income will Warren's 2018 adjusted gross income consist of? (i.e. what amounts are reported after completing the netting process?)
Ordinary
Income LTCG STCG

Accepted Answer

A) $208,000 $16,000 $- 0 - 
B) $217,000 $14,000 $(7,000) 
C) $208,000 $23,000 $(7,000) 
D) $217,000 $7,000 $- 0 - 
A) $208,000 $16,000 $- 0 - 
B) $217,000 $14,000 $(7,000) 
C) $208,000 $23,000 $(7,000) 
D) $217,000 $7,000 $- 0 -

Question 17

Match each statement with the correct term below.
-Section 1250 property

Accepted Answer

A) Stocks, bonds, options. 
B) Depreciable real property. 
C) All or part of any gain on sale is excluded. 
D) Taxed at a maximum rate of 25%. 
E) Gain or loss on the sale of artwork.
F)Depreciable tangible personal property.
G)Subject to full recapture as ordinary income of all depreciation taken.
H)Gain on real property attributable to excess depreciation is ordinary income. 
A) Stocks, bonds, options. 
B) Depreciable real property. 
C) All or part of any gain on sale is excluded. 
D) Taxed at a maximum rate of 25%. 
E) Gain or loss on the sale of artwork.
F)Depreciable tangible personal property.
G)Subject to full recapture as ordinary income of all depreciation taken.
H)Gain on real property attributable to excess depreciation is ordinary income.

Question 18

Gross selling price includes
I.the amount of a seller's debt assumed by the buyer.
II.the fair market value of services received by the seller from the buyer.
​

Accepted Answer

A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct. 
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Both statements are correct. 
D) Neither statement is correct.

Question 19

What incentive provisions or preferential treatments exist for capital gains?

Accepted Answer

All taxpayers receive a tax benefit from

Question 20

Johnson Corporation's 2018 business operating income is $200,000. Johnson also recognizes an $8,000 Section 1231 loss, an $11,000 Section 1231 gain, and a $5,000 long-term capital loss from the sale of investment securities. What is Johnson Corporation's 2018 taxable income?

Accepted Answer

A) $195,000 
B) $198,000 
C) $200,000 
D) $203,000 
E) $211,000 
A) $195,000 
B) $198,000 
C) $200,000 
D) $203,000 
E) $211,000

Unrecaptured Section 1250 gain I.is subject to a maximum tax rate of 25%. II.applies only to real property owned by individuals.

The amount realized equals the gross selling price less any selling expenses.

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 a fully depreciated air compressor that cost $975 for $650. The compressor was used to operate air tools.

LeRoy has the following capital gains and losses for the current year: ? Short-term capital gain \ 10,000 Collectible loss (3,000) Long-term capital gain 5,000 If LeRoy is single and has taxable income from other sources of $52,000, what is the tax on his capital gains?

In 2015, Jim had a $5,000 net Section 1231 gain. In 2017, Jim reported a Section 1231 loss of $12,000. In 2018, Jim has a $15,000 net Section 1231 gain. He had no other sales of property in 2018. What is Jim's ordinary income from his 2018 property transactions?

Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000. I.Melissa's tax on the $7,500 gain is $1,125. II.Melissa has a deductible capital loss of $3,000 in 2018.

Match each statement with the correct term below. -Unrecaptured Section 1250 gain

All of the gain from the sale of qualified small business stock, purchased after 9/27/2010 and held more than five years is excluded from tax.

Corky receives a gift of property from her Aunt Cynthia. Cynthia purchased the property 17 years ago for $375,000. On the date of the gift, the property is appraised at $500,000. What is Corky's holding period for the property if she sells it one month after the gift was completed?

Discuss the general differences between Section 1245 and Section 1250 property.

Match each statement with the correct term below. -Section 1250 property

Gross selling price includes I.the amount of a seller's debt assumed by the buyer. II.the fair market value of services received by the seller from the buyer.

What incentive provisions or preferential treatments exist for capital gains?

Johnson Corporation's 2018 business operating income is $200,000. Johnson also recognizes an $8,000 Section 1231 loss, an $11,000 Section 1231 gain, and a $5,000 long-term capital loss from the sale of investment securities. What is Johnson Corporation's 2018 taxable income?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, Depletion, and Amortization

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Choice of Business Entity-Other Considerations

Tax Research

Filters

Exam 11: Property Dispositions

Unrecaptured Section 1250 gain I.is subject to a maximum tax rate of 25%. II.applies only to real property owned by individuals. ​

The amount realized equals the gross selling price less any selling expenses.

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 a fully depreciated air compressor that cost $975 for $650. The compressor was used to operate air tools.

LeRoy has the following capital gains and losses for the current year: ? Short-term capital gain \ 10,000 Collectible loss (3,000) Long-term capital gain 5,000 If LeRoy is single and has taxable income from other sources of $52,000, what is the tax on his capital gains?

In 2015, Jim had a $5,000 net Section 1231 gain. In 2017, Jim reported a Section 1231 loss of $12,000. In 2018, Jim has a $15,000 net Section 1231 gain. He had no other sales of property in 2018. What is Jim's ordinary income from his 2018 property transactions?

Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000. I.Melissa's tax on the $7,500 gain is $1,125. II.Melissa has a deductible capital loss of $3,000 in 2018. ​

Match each statement with the correct term below. -Unrecaptured Section 1250 gain

All of the gain from the sale of qualified small business stock, purchased after 9/27/2010 and held more than five years is excluded from tax.

Corky receives a gift of property from her Aunt Cynthia. Cynthia purchased the property 17 years ago for $375,000. On the date of the gift, the property is appraised at $500,000. What is Corky's holding period for the property if she sells it one month after the gift was completed?

Discuss the general differences between Section 1245 and Section 1250 property.

Match each statement with the correct term below. -Section 1250 property

Gross selling price includes I.the amount of a seller's debt assumed by the buyer. II.the fair market value of services received by the seller from the buyer. ​

What incentive provisions or preferential treatments exist for capital gains?

Johnson Corporation's 2018 business operating income is $200,000. Johnson also recognizes an $8,000 Section 1231 loss, an $11,000 Section 1231 gain, and a $5,000 long-term capital loss from the sale of investment securities. What is Johnson Corporation's 2018 taxable income?

Federal Income Taxation-An Overview

Income Tax Concepts

Income Sources

Income Exclusions

Introduction to Business Expenses

Business Expenses

Losses-Deductions and Limitations

Taxation of Individuals

Acquisitions of Property

Cost Recovery on Property: Depreciation, Depletion, and Amortization

Non-Recognition Transactions

Choice of Business Entity-General Tax and Nontax Factorsformation

Choice of Business Entity-Operations and Distributions

Choice of Business Entity-Other Considerations

Tax Research

Filters

Unrecaptured Section 1250 gain I.is subject to a maximum tax rate of 25%. II.applies only to real property owned by individuals.

Melissa sells stock she purchased in 2005 for a $7,500 gain in 2018. In August 2018, she also sells land she purchased as an investment in December 2017 at a loss of $12,000. I.Melissa's tax on the $7,500 gain is $1,125. II.Melissa has a deductible capital loss of $3,000 in 2018.

Gross selling price includes I.the amount of a seller's debt assumed by the buyer. II.the fair market value of services received by the seller from the buyer.