Exam 11: Property Dispositions

The gain from the sale of qualified small business stock held for more than six months can be rolled over if stock from another qualified small business is purchased within 60 days.

Unrecaptured Section 1250 gain I.is taxed at a maximum rate of 15%. II.is a term that does not apply to corporations. ​

Karl paid $200,000 for business-use equipment. Using straight-line depreciation, his deduction would have been $22,000, but Karl uses MACRS depreciation and deducts $37,500 for the first two years of usage. At the beginning of the third year, Karl sells the equipment for $190,000. How much of the gain is recaptured under Section 1245 as ordinary income?

When securities are sold and the securities were purchased on different dates and at different prices I.the basis of the shares may be determined on a first-in, first-out basis. II.the basis of the shares may be determined on a last-in, first-out basis. ​

Long-term capital gain classification is advantageous to taxpayers because of which of the following? I.Long-term capital gains are generally taxed at a lower rate than ordinary income. II.Part of a long-term capital game is excluded from income. ​

Unrecaptured Section 1250 gain is taxed at a maximum rate of 25%.

Carlos received an antique dresser from his aunt. Since the dresser is worth $6,000 more than what his aunt paid for it, the holding period begins with the date of the gift.

During 2018, Ester recognizes a $10,000 Section 1231 gain, a $25,000 Section 1231 loss, and ordinary income of $20,000. What are the results of Ester's netting of these items?

During 2018, Silverado Corporation has the following Section 1231 gains and losses: ? Casualty loss \ (10,000) Section 1231 gains 12,000 Section 1231 losses (3,000) During the period 2013 - 2017, the corporation recognized $8,000 of net Section 1231 losses as ordinary losses that have not been recaptured. How much of the 2018 Section 1231 gains and losses are recognized as long-term capital gains?

Adjustments to gross selling price include I.the amount of a seller's expenses paid by the buyer. II.the amount of the buyer's debt assumed by the seller. ​

Santana purchased 200 shares of Neffer, Inc. Common Stock on November 13, 2017, for $3,400 and paid a $200 commission. On December 28, 2017, Santana received a $2 per share cash dividend from Neffer. On June 17, 2018, Neffer declares and distributes a 2 for 1 stock split. On August 4, 2018, Santana purchased an additional 300 shares of Neffer, Inc. Common Stock for $4,200 plus a $300 commission. On November 22, 2018, Santana sells 500 shares of Neffer, Inc. stock for $6,000 and pays a $400 commission on the sale. Santana's gain (loss) on the sale is

Pamela purchased 500 shares of Qualified Small Business Stock (QSB) for $900,000 on October 2, 2012. On November 29, 2018, she sells the stock for $1,000,000. Pamela also sells 100 shares of stock she acquired two years ago realizing a loss of $10,000. Pamela has $100,000 of other income. Which of the following statements about the stock sale is/are true? I.Pamela will pay no tax on the two stock sales. II.Pamela can only deduct $3,000 of the $10,000 loss on the sale of the stock. ​

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

For depreciable real property, all depreciation taken must be recaptured and treated as ordinary income.

Knox Cable Corporation has the following gains and losses from Section 1231 property during 2018: ? Casualty losses \ (14,000) Casualty gains 5,000 Section 1231 gains 9,000 Section 1231 losses (6,000) No net Section 1231 losses have been deducted as ordinary losses in prior years. How will this information affect Knox's 2018 taxable income?

Tonya purchased 500 shares of Home Depot, Inc. common stock on December 13, 2015, at a cost of $3,600. She paid a commission of $150 on the purchase. On February 18, 2017, she received 250 shares of Home Depot, Inc. common stock as a tax-free dividend. Tonya sells 600 shares for $3,700 on January 8, 2018, and pays a $100 commission on the sale. Tonya's gain (loss) on the sale is characterized as:

Matt has a substantial portfolio of securities. As of December 2 of the current year, Matt has a net capital gain position of $22,000. Discuss Matt's optimal tax-planning strategy for capital gains and losses.

Pedro sells a building for $170,000 in 2018. He paid $145,000 for the building and it had an adjusted basis of $110,000 as of the sale date. I.If the building was purchased in 1993 and MACRS straight-line depreciation is used, $35,000 of the gain is recaptured under section 1250. II.If the building is an apartment building purchased in 1985, only the gain which is attributable to excess depreciation is recaptured as ordinary income under Section 1250. III.If the building was purchased in 1993, $35,000 of the gain is unrecaptured section 1250 gain, and $25,000 of the gain is a section 1231 gain. ​

Hurst Company purchased an apartment building in 1986 for $700,000. The building is sold in 2018 for $900,000. The actual depreciation deducted on the building as of the sale date was $600,000. Straight-line depreciation for the same period would have been $400,000. What is the amount and character of the gain recognized on the sale?

George purchased a commercial building in 1999 for $900,000. During 2018, the building is sold for $700,000. The actual accelerated depreciation on the building as of the sale date was $400,000. Straight-line depreciation for the same period would have been $350,000. What is the amount and character of the gain recognized on the sale?