Exam 11: Property Dispositions

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 land purchased in 1989 that he used to park construction equipment at a gain of $16,500.

When a security becomes worthless I.no loss can be deducted because a realization has not occurred. II.the measure of the loss is the adjusted basis of the securities. ​

Which of the following trade or business assets are Section 1245 properties? I.Racehorses. II.Livestock held for breeding purposes III.Manufacturing equipment. IV.Residential rental property placed in service in 2008. ​

The exclusion of a percentage of the capital gain realized on the sale of qualified small business stock acquired after February 17, 2009, and before September 27, 2010, results in an effective tax rate on these capital gains of

Match each statement with the correct term below. -Section 1245 property

Which of the following best describes the tax treatment of a taxpayer's net Section 1231 loss that resulted from the sale of depreciable equipment used in a business activity?

The lookback recapture rule nets the current-year net Section 1231 gain against Section 1231 ordinary loss deductions taken in the previous three years.

Capital gain and loss planning strategies include I.the optimal action of using capital gains to reduce an individual taxpayer's net capital loss for a year to zero. II.selling enough capital assets to create a $3,000 capital loss. ​

Dallas Wildcat Drilling Co. sells an oil-drilling rig for $3,000,000. The drilling rig was purchased in 2012 for $2,000,000. Depreciation deductions of $1,200,000 have been taken up to the time of sale. What amount and character of gain will Dallas report from the sale of this asset?

Brock exchanges property with an adjusted basis of $40,000 subject to a mortgage of $20,000 for other property owned by Reese with a fair market value of $80,000. Reese assumes the mortgage. No cash or other assets were part of the trade. Brock's amount realized is

Serenity has the following capital gains and losses for the current year: ? Short-term capital loss \ (8,000) Long-term capital gain 3,000 Collectible gain 2,000 Collectible loss (4,000) If Serenity is single and has taxable income from other sources of $75,000, what is the impact of her capital gains and losses on her income tax liability?

Marilyn sells 200 shares of General Motors stock for $80 per share. She pays a $100 commission on the sale and has an adjusted basis of $8,000 on the stock. I.The amount realized from the sale is $15,900. II.Marilyn has a recognized gain of $8,000. ​

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. -After using a house as his personal home for 20 years, George converts it in 2007 to an office building for use in his construction business. He sells the building at a $65,000 loss in 2018.

Rachael purchased 500 shares of Qualified Small Business Stock (QSB) for $900,000 on March 2, 2009. On November 29, 2018, she sells the stock for $1,000,000. Rachael also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000. Which of the following explain(s) tax consequences of the QSB stock sale? I.The effective tax rate applied to the net gain on the sale of the QSB stock is 15%. II.Rachael nets her $10,000 loss with her $100,000 gain after applying her exclusion rate. III.Rachael is eligible for a 75% exclusion of the gain from the QSB stock sale. IV.The QSB stock is QSB stock partly because Rachael held the stock for the required 3-year minimum. ​

Watson sells equipment he used in his business. The equipment cost $50,000 and had an adjusted basis of $32,000 on the date of sale. a.If Watson sells the equipment for $23,000, what is the amount and character of the recognized gain or loss? b.If Watson sells the equipment for $55,000 what is the amount and character of the recognized gain or loss?

Sigma Corporation had the following capital gains and losses for 2014 through 2018: ? 2014 2015 2016 2017 2018 \ 30,000 \ (20,000) \ 15,000 \ (30,000) \ 60,000 Sigma's net capital gain for 2018 is:

Discuss the general differences between Section 1245 and Section 1250 recapture provisions.

In September 2018, Eduardo sells stock he purchased in October 2014 at a gain of $5,000. If Eduardo is in the 10% marginal tax rate bracket and he has no other capital asset sales in 2018, what is his tax on the sale of the stock?

Match each statement with the correct term below. -Qualified Small Business stock gain

Unrecaptured Section 1250 gain is the amount of gain on the sale of personal assets by individuals not otherwise treated as ordinary income.